Under the 2001 Act on the Croatian National Bank, the central bank has been granted independence in the preparation of legislative actions needed for opening the procedure for the country's accession to the EU. In that context, the state audit - until then within the CNB - was replaced by the external auditor, in line with the trends present in central banking.
As regards the requirement that data which are normally subject to audit are to be submitted to the Parliament, it should be noted that the parliamentary Finance and Central Budget Committee already has at its disposal all the audit reports, the last of which is the 2014 audit report. This means that the Parliament of the Republic of Croatia is already in possession of all the data and has the instruments needed to require any additional audit reports, should it deem it necessary. In addition, the external CNB auditor is approved by the Finance and Central Budget Committee, following a public bidding procedure and upon the proposal of the Council of the Croatian National Bank.
To ensure additional transparency, the Croatian National Bank has set up an external Audit Committee, consisting of reputed professionals in the areas of finance, audit and information technology, which evaluates the work of the independent external auditor of the CNB. The members of the Audit Committee are: Prof. Vlado Leko, Ph.D., Prof. Katarina Žager, Ph.D. and Neven Vrček, Full Professor and Dean of the Faculty of Organisation and Informatics in Varaždin.
In addition, the engagement of the state audit would add to the mentioned increased business transparency, were it to use comparable European criteria as the benchmark for evaluating whether Croatia, in terms of operating costs, has an effective, economic and efficient central bank. For the same purpose and in the same manner, the State Audit Office, can naturally analyse and evaluate all other institutions audited by it.
The CNB is not financed by the budget but by income generated by the CNB in the pursuit of its legally determined tasks, which include in particular, international reserves management, bank supervision and coin and banknote issuance. Each year, the CNB prepares financial reports on its operations, which are subject to audit in accordance with the international accounting standards and domestic regulations on audit, and the quality of the audit report is also subject to the Audit Committee's supervision.
The CNB makes sufficient earnings to cover its operating costs and to make transfers to the Ministry of Finance in the conditions of historically the lowest interest rates and negative euro rates for maturities up to six years. The CNB has been able to achieve that by pursuing a good financial assets management policy, primarily by purchasing long-term securities since 2011, thereby prolongating portfolio maturity, a practice which has proved to be a correct investment decision, given a sharp fall in yields on euro bonds which followed. This activity helped increase CNB income in the period from 2012 to 2015 by approximately HRK 1.8m, the amount which was in fact entirely transferred to the Ministry of Finance. In the years that followed, i.e. from 2012 onwards, decisions were made to increase this portfolio and to extend its maturity, thereby ensuring stable income in the years beyond 2016.
Central bank efficiency can also be measured by the absence of bank resolution costs in the Republic of Croatia, despite long and the deepest ever recession which hit the EU in 2008. Most European countries, despite milder recession, were faced with high fiscal costs of resolution during that period.
The Croatian National Bank stands out among EU member states as a bank with below-average operating costs and above-average profit. Even though profit generation is not the objective of central banks, the profit generated by the CNB is one of the highest when viewed in relation to bank asset size or GDP. Thus, in 2014, the CNB generated a profit of approximately 0.8% of GDP with only the central banks of the Czech Republic, Ireland and Cyprus generating a higher profit.
When the operating costs of the CNB (0.09% of GDP) are compared to the operating costs of central banks with a relatively similar number of population, such as that of Latvia (0.15% of GDP), Bulgaria (0.12% of GDP), Ireland and Lithuania (0.11% of GDP), Austria and Slovakia (0.1% of GDP), Hungary (0.09% of GDP) and Slovenia (0.08% of GDP), it is clear that the CNB has placed itself among more frugal and economic central banks.
If the absolute amount of operating costs per employee is observed, it can be noted that among the comparable countries, only the central bank of Bulgaria (which has the lowest level of GDP per capita and lowest wages) has lower costs than the CNB, while CNB's costs are similar to those in Romania and the Czech Republic and a slightly lower than in Hungary and Poland.
Also, as regards operating costs, the CNB, as an entity subject to public procurement, discloses these costs transparently on its website, making these data publicly available.