At its session today, the Croatian National Bank Council decided that, starting from the reserve requirement calculation date of 9 October 2008, banks' vault cash will no longer be included in the liquid kuna claims that may be used to maintain the kuna component of the reserve requirement. As a result, banks will have to increase the funds allocated to the settlement accounts by some HRK 2.6bn.
This change represents one more step in the efforts of the Croatian National Bank to align its reserve requirement system with the practices of other relevant European central banks, which include only the funds that banks deposit in the account with the central bank in the reserve requirements.
Further reasons for adopting such a decision at this particular moment are to be found in the expected increase in the system's liquidity connected with the ownership changes at INA and the need to neutralise surplus liquidity preventing it from creating an additional stimulus to inflation.
