Central bank tasks have evolved significantly over time. Following a series of banking crises caused by liquidity shortages, early central banks were, in addition to payment operations, entrusted with the role of lenders of last resort to banks and, for the long time, provided financing to the government. After the severe economic crisis of the 1930s (the Great Depression), they were given a new mandate – maintenance of price stability and, in the US, full employment. By contrast, the recent financial crisis has put financial stability at the centre of attention, with central banks being increasingly faced with other challenges – Governor Vujčić noted at the beginning of his speech at the 41st Meeting of the Central Bank Governors' Club of the Central Asia, Black Sea Region and Balkan Countries hosted by the Central Bank of Turkey in Istanbul from 24 to 26 March. The CNB Governor was one of the speakers in the thematic session on central bank governance.

Adding financial stability has increased appetite for expanding central bank mandates. However, too many tasks may be in partial conflict with one another. Activities aimed at achieving one objective may threaten another objective. The standard example is monetary policy tightening to attain low inflation, which may decelerate economic activity and reduce demand for labour, producing an adverse effect on bank performance and financial stability. Similarly, the adoption of measures governing the relationship between banks and consumers, in addition to changing market outcomes, has a direct impact on the relationship between consumers (consumer protection) and banks (financial stability), noted the Governor.

Failure to achieve one of their tasks may easily weaken the position of central banks and raise the issue of their independence, i.e. monetary policy independence, Governor Vujčić pointed out, while leaving open for discussion the issue of the extent to which it is currently politically feasible to advocate for a limited number of objectives and tasks for central banks. Should, in a suboptimal case, objectives be expanded in response to political imperatives, central banks would need to get broader powers and develop additional instruments. However, all this would not solve the issue of conflict between individual objectives and the related ambiguity of mandate.

The CNB Governor also analysed the financial, social and political framework for assessing the expansion of the central bank's mandate using the example of financial stability and consumer protection. He pointed out that activities aimed at financial stability require mutual cooperation and involve difficult and complex processes. Central banks need to develop new instruments for the successful performance of new tasks, which often implies additional powers. Thus, the maintenance of financial stability requires the development of macroprudential and microprudential instruments as well as larger resources for banking supervision, noted the CNB Governor. For the most part, consumer protection has not yet been included in the legal texts defining the central bank's mandate. However, political support for such tasks is strong against the background of increased anti-banking sentiment following the global financial crisis and cases such as that of Swiss franc loans. In the current legal framework for their actions in this field, central banks foremost rely on the soft approach to enhancing the financial literacy of the general public, providing timely and complete information, intermediation among stakeholders and, where necessary, tighter lending standards for consumers – which the Croatian National Bank has recently introduced under the Recommendation on actions in granting non-housing consumer loans.

Other potential tasks have also been discussed by the general public and the professional and political community. In view of the obvious impact of global warming, also considered is whether and how can central banks contribute to actions against climate change. In addition, the so-called modern monetary theory argues in favour of central bank financing to the government, which is a return to the past. However, the past has taught us that this prevented central banks from keeping price stability and inflation under control. In concluding his speech, the CNB Governor mentioned that emerging market economies often face new challenges even before advanced economies, and presented the evolution and current structure of financial regulation in Croatia.

Speaking in the same thematic session were also Elvira Nabiullina, the Governor of the Bank of Russia, and Jiří Rusnok, the Governor of the Czech National Bank, who, in addition to their experience in central banking, described also the establishment of the single supervisory system for the overall financial system, including banks. George Kabwe, Chief of the Safeguards Assessment Division in the IMF Finance Department, spoke about the challenges of modernising the functions of central banks and their responsibility and transparency.

Also discussed at the Governors' Club meeting were the global economic and financial outlook and the role of communication with the public.