The newly appointed Council of the Croatian National Bank, chaired by the Governor Dr. Željko Rohatinski, held its first working meeting on Wednesday, July 26 2000 to review recent economic and monetary developments and monetary policy expectations for the current quarter. The Council also agreed the 1999 Annual Report of the Croatian National Bank and the rules of procedure to be followed by the Council. In addition, the Council approved the submitted nominations for a number of managers of Croatian banks.

Recent economic developments of special importance are the growth of industrial production (in the first half of the year industrial production grew by 2.9 percent compared with the same period last year) and developments observed in tourism, which are more favorable than expected. It is estimated that this year's tourism receipts could exceed last year's by about 22 percent, providing the central bank with the opportunity to strengthen its international reserves, which are now amounting to more than USD 3.5 billion. The exchange rate is currently exposed to appreciation pressure, which is, however, not causing any excessive exchange rate fluctuations. Retail prices in June were indeed 7 percent higher than in June 1999, but since a thorough insight in elements that contributed to the price increase shows that it was primarily induced by new prices of beverages, tobacco and oil products, as well as higher prices of traffic services, it can be expected that this shift in prices will be followed by lower inflation rates. Interest rates on the Zagreb Money Market have been considerably low recently, also on overnight loans and loans with maturity of up to 3 months, which evidences good liquidity of the banking system.

At the Wednesday meeting, Zagrebačka banka d.d. Zagreb was given approval for acquiring 20 percent of voting shares in Varaždinska banka d.d. Varaždin. As a part of the same decision, the stake of Varaždinska banka's voting shares that may be acquired by Zagrebačka banka was limited to 90 percent.

The Council of the Croatian National Bank approved the nominations of Mr. Antun Sermek for chairman and Ms. Mira Ausmann for member of the management board of Hypobanka d.d. Zagreb, Mr. Vlaho Sutić for chairman and Mr. Krešimir Brkljačić for member of the management board of Dubrovačka banka d.d. Dubrovnik and Mr. Mato Lukinić for chairman and Mr. Borna Zane for member of the management board of Varaždinska banka d.d. Varaždin. Further, the CNB Council gave its approval for the nominations of Mr. Ivan Mihaljević for chairman and Ms. Alma Jukić for member of the management board of Slavonska banka d.d. Osijek, Mr. Petar Radaković for chairman and Mr. Nenad Jeđud, Mr. Borislav Centner and Mr. Tomislav Vuić for members of the management board of Bjelovarska banka d.d. Bjelovar. Additionally, the CNB Council approved the nominations of Mr. Darinko Pupovac for member of the management board of Dalmatinska banka d.d. Zadar and Mr. Krešimir Leko for member of the management board of Hrvatska banka za obnovu i razvoj.