Inaugural session of the new CNB Council

Published: 19/7/2006

The new Council of the Croatian National Bank held its inaugural session, chaired by Governor Rohatinski, and attended by Finance Minister Šuker, on Wednesday.

Governor Rohatinski acquainted the members of the Council with the major elements of central bank activity, instruments of monetary policy which it uses to accomplish its tasks as well as challenges that lay ahead. He particularly pointed to the factors which make it impossible for the central bank to simply act by the book, such as high euroisation of the financial system, almost exclusive foreign ownership of local banks, high inflow or foreign capital driven by what are still high rates of returns in the country, alongside ample supply of foreign currency in the small and shallow market as well as aggressive credit supply and rapid credit growth.

The impacts of such developments can be seen in rising foreign debt (though of lately at somewhat slower rates, with foreign debt standing at EUR 27.3bn at end-June) and steady appreciation pressures on the exchange rate which the central bank has been fighting off for years by means of interventions in the foreign exchange market, thus increasing, in this year alone, international reserves by EUR 580m. In such an environment, the central bank is forced to find solutions that will ensure that the system's imbalances remain within acceptable limits and thus, given satisfactory price and exchange rate stability, provide support to the overall economic policy and sustainable growth.

On this occasion, the members of the CNB Council were also handed the most important documents which stipulate their competences, authorities, obligations and rules of procedure in the carrying out of the tasks they had been entrusted with. These include copies of the Croatian National Bank Act, the Banking Act, the Foreign Exchange Act, the CNB Statute and the Rules of Procedure of the CNB Council as well as a statement form by which they attest to their adequacy as CNB Council Members in terms of meeting all the applicable legal requirements for that position.