Technical preparations for the introduction of kuna in Eastern Slavonia, Baranya and Western Syrmia completed

Published: 7/5/1997

The Council of the National Bank of Croatia chaired by Governor Dr. Marko Škreb held a meeting on Wednesday, May 7, and approved the annual report of the National Bank of Croatia for 1996, reviewed recent economic and monetary indicators, examined future projections, granted operating licenses to several newly established financial institutions, and made several decisions acting in accordance with the authority entrusted to the central bank.

Members of the Council were briefed on preparations for the introduction of the kuna in the region of Eastern Slavonia, Baranya and Western Syrmia. It was stated that all technical preparations were completed, and that only the date of the conversion and the conversion rate were yet to be announced. It was especially emphasized that there were no grounds for fears and speculations that "the Yugoslav dinar could undermine the Croatian kuna". According to the available estimates, the total of YU-dinar cash and deposits in the region of Eastern Slavonia, Baranya and Western Syrmia amounts only to about 2 of the total money supply in the Croatian monetary system, which implies that even if all YU-dinar cash balances and deposits from the region were converted into the kuna, the stability of the Croatian currency would by no means be jeopardized.

The macroeconomic framework in Croatia remained stable in April as well: the exchange rate showed only minor fluctuations, while retail prices increased by only 0.1 % compared to the previous month, or by 4.1 % compared to April 1996. The liquidity of the banking system continued to be satisfactory, while a sudden increase in the demand for money that occurred at the end of April on account of income-tax payment time was accommodated by the use of lombard facilities. In April the Government settled all its liabilities to banks, which provided a basis for additional increase in bank credit to enterprises and household sector. It was noted that the continued decrease in lending rates on kuna loans which are not secured by a currency clause could be interpreted as yet another indicator of more favorable financial trends (the average interest rate charged on these loans in March was 16.9 %).

The increase in the quantity of bank credit as well as the increase in currency in circulation both signal a recovery in economic activity. Favorable trends were also noted in terms of total industrial output, trade, construction industry, transportation and tourism. In addition, the data showing that last year direct foreign investment in Croatia amounted to USD 350 million was estimated as encouraging. Namely, according to the amount of direct foreign investment expressed as a percentage of GDP, Croatia occupies the third place in the group of transition economies, immediately after Hungary and the Czech Republic. The Council stated that it might be expected that all these favorable trends would contribute to a faster pace of structural adjustment of the Croatian economy and should enable an increased level of employment as well as a decrease in unemployment, which is of particular importance for future economic developments.

The Council granted a license to another foreign bank entering the Croatian banking circles, BNP-Dresdner Bank (Croatia) d.d., that is formed jointly by Dresdner Bank, the second largest German bank, and Banque Nationale de Paris, the third largest French bank. The Chairman of the Management Board whose nomination was approved by the Council will be Mr. Thomas Grosse, and the Member of the Management Board Mr. Dominique Menu. The fact that this new bank subsidiary will start operating with capital that is about two times larger than the minimum capital required by Croatian banking regulations for obtaining a full banking license illustrates clearly enough the seriousness of the bank's intentions and plans in the Croatian market.

In addition, the Council granted an operating license to Međimurska štedionica d.d. Čakovec and approved the nominations of Ms. Mirjana Horvat-Korent for Chairman of the Management Board and Ms. Mirjana Klobučarić for Member of the Management Board. The Council also issued an operating license to Štedionica ViD d.o.o. Zagreb, approving the nominations of Ms. Jozefina Dorotić; for Chairman of the Management Board and Ms. Tanja Matina for Member of the Management Board. Further, an operating license was granted to Štedionica Zlatica d.o.o. Zagreb, and the nominations of Mr. Franjo Valjak for Chairman of the Management Board and Mr. Branko Nikčević for Member of the Board were approved by the Council. The Council agreed on the nominations of Ms. Đurđa Tolić for Chairman of the Management Board of Agroobrtnička banka d.d. Zagreb and Ms. Lovorka Penavić for Member of the Management Board of Raiffeisenbank Austria d.d. Zagreb.

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MAY 7, 1997


According to the decision of the Council of the National Bank of Croatia made on Wednesday, May 7, the National Bank of Croatia will issue, in cooperation with the Croatian Mint, commemorative gold and silver coins "The First President of the Republic of Croatia Dr. Franjo Tuđman" in order to contribute to the forthcoming celebration of the 75th birthday of the person under whose guidance the Republic of Croatia was established as an independent and internationally recognized state, which had been for centuries a dream of the Croatian people. The commemorative gold coin will be issued in denomination of HRK 1000, and the silver coin in denominations of HRK 200 and 150. The coins have been designed by Mr. Kažimir Hraste, an academy-trained sculptor.

At the Wednesday meeting the Council of the National Bank of Croatia also decided on the issue and putting into circulation of the commemorative 25 kuna coin "Hrvatsko Podunavlje". The designer of this coin, which is bound to be particularly interesting to coin collectors because it will be the first Croatian coin that will have a distinct central part and an outer ring, each minted in a different metal, is Mr. Damir Mataušić, an academy-trained sculptor.

New series of the kuna and lipa coins dated 1997 will soon be put into circulation bearing the features that are characteristic of coins minted in odd years.