Taking into account a vital role banks play in financial flows and the economy, banks are subject to strict regulatory requirements concerning the quantity and quality of capital with the aim of ensuring the continuity of their operations. Two parallel frameworks apply to banks in the European Union today: the prudential framework and the resolution framework. While the primary objectives of the prudential framework include ensuring an appropriate capital protection against risk exposure and preventing excessive use of leverage, the resolution framework ensures that banks maintain appropriate capacity to absorb losses and the recapitalisation in case of failure.

The prudential framework includes microprudential and macroprudential regulations and supervision, which are complementary and equally important in preserving the stability of the entire financial system. They are fundamentally different according to their focus or scope: while microprudential supervision focuses on individual financial institutions and the protection from idiosyncratic risks, macroprudential supervision focuses on the financial system as a whole and the mitigation of systemic risks, taking into consideration the interactions between institutions and feedback between the financial system and the economy.

The domestic institutional framework for prudential policy implementation is harmonised with the regulations of the European Union. The Capital Requirements Regulation (CRR) is directly applicable in the Republic of Croatia, and the Capital Requirements Directive (CRD) has been transposed into the Credit Institutions Act. With the package of these measures for credit institutions, global prudential standards on credit institutions' capital (Basel III agreement) have been transposed into the European regulatory framework, with the aim of increasing their resilience to potential future shocks. The most important national acts related to financial stability and macroprudential policy implementation within the scope of work of the central bank are the Act on the CNB, which explicitly entrusts the central bank with the task to implement macroprudential policy for contributing to maintaining the stability of the financial system as whole, within its competence; the Credit Institutions Act, which regulates the most important segment of the domestic financial system within the CNB's competence; and the Act on the Financial Stability Council, which provides for cooperation of institutions whose activities may influence financial stability: the CNB, the Croatian Financial Services Supervisory Agency (HANFA), the Ministry of Finance and the Croatian Deposit Insurance Agency. In addition to the above acts, particularly important for the maintenance of financial stability, especially in crisis situations, are the Deposit Guarantee Scheme Act and the Act on the Resolution of Credit Institutions and Investment Firms.

The resolution framework for credit institutions in the European Union was introduced in 2014 in order to prevent passing on the costs of banks' failure to taxpayers. It is based on the Single Resolution Mechanism Regulation (SRMR) and the Bank Recovery and Resolution Directive (BRRD), which was transposed into the legislation of the Republic of Croatia through the Act on the Resolution of Credit Institutions and Investment Firms.

The resolution and prudential frameworks apply in parallel and are complementary, with the common goals of achieving long-term sustainability, stability and efficiency of the financial system, as well as reducing the probability and costs of potential future financial crises.