MONETARY POLICY
INSTRUMENTS
IN THE REPUBLIC OF CROATIA
Monetary policy
Central bank’s objectives and tasks
• STABILITY OF PRICES – the main objective
• SUPPORTING THE ECONOMIC POLICY OF THE EU,
WITHOUT PREJUDICE TO ITS PRIMARY OBJECTIVE
The Croatian National Bank has the following tasks:
• to define and implement the monetary and foreign exchange policies;
• to hold and manage the foreign reserves of the Republic of Croatia;
• to issue banknotes and coins;
• to exercise supervision and oversight of credit institutions ….;
• …
• to regulate and improve the payment system;
• to perform operations on behalf of the Republic of Croatia, as provided
by law;
• to contribute to the stability of the financial system as a whole; and
• to perform other activities, as provided by law.
Monetary policy instruments and
measures of the CNB
1. OPEN MARKET OPERATIONS
2. STANDING FACILITIES
3. RESERVE REQUIREMENT
4. FOREIGN CURRENCY AUCTIONS
5. MINIMUM REQUIRED AMOUNT OF FOREIGN CURRENCY
CLAIMS
OPEN MARKET OPERATIONS
1. Regular operations
2. Fine tuning operations
3. Structural operations
1. OPEN MARKET
OPERATIONS
1.1. Regular operations
• reverse repo operations –
practically they work like collateral
loans that the central bank approve to
banks
• used to increase the system's
liquidity
• it can be conducted every week
(on Wednesdays), with a maturity of
up to one week
• conducted at standard offer
auctions
• acceptable collateral: MoF treasury
bills with an original maturity of up
to one year
REVERSE REPO AUCTION
held on 14 October 2009 (in
million HRK)
No. R-37-2009
Repurchase date
21 October
2009
Total amount of bids
submitted
4,705.70
Fixed repo rate
6.00%
Total amount of bids
accepted
470.57
Total amount of bids
rejected
4,235.13
The percentage of allotment
10.00%
The Croatian National Bank account
RESERVE
MONEY /
PRIMARY
MONEY/
MONETARY
BASE /
M0
1.2. Fine tuning operations
1.1. Regular
operations
reverse repo
operations – practically
they work like
collateral loans that the
central bank approve to
banks
• repo/reverse repo operations, direct purchase/sale
of securities
• used to increase or decrease the system's liquidity
• frequency and maturity not standardised
• acceptable collateral: MoF treasury bills with an
original maturity of up to one year
1.3. Structural operations
• direct purchase/sale of securities and repo/reverse
repo operations
• used to increase or decrease the system's liquidity
• maturity not standardised
• acceptable collateral: government securities.
STANDING FACILITIES
1. Deposit facility
2. Lombard loan
3. Intraday loan
2. STANDING
FACILITIES
2.1. Deposit facility
•
•
•
banks may deposit surplus funds with the CNB at the end of the day
maturity: overnight
interest rate: 0.00%
2.2. Lombard loan
•
granted on the basis of a bank's application at the end of a working
day
•
may be used on a daily basis
•
maturity: overnight
•
collateralised
•
interest rate: 2,5%
2.3. Intraday loan
• granted by setting a limit in a bank's settlement account during the day
• may be used on a daily basis
• maturity: the end of the day when it was used
• collateralised
•
interest-free
The Croatian National Bank account
RESERVE
MONEY /
PRIMARY
MONEY/
MONETARY
BASE /
M0
3. RESERVE REQUIREMENT
• reserve requirement rate: 12,0%
• calculation base consists of:
• a kuna component, which includes kuna sources of funds,
i.e. received kuna deposits and loans (with or without a
currency clause), issued debt securities denominated in
kuna …
• a foreign exchange component, which includes foreign
exchange sources of funds, i.e. received foreign exchange
deposits and loans, obligations arising from the issued
securities in foreign currency (excluding banks' equity
securities) …
•
kuna and foreign exchange components of the calculation base are calculated
separately, representing the average daily balance of the kuna and foreign exchange
sources of funds in a single calculation period
•
75% of the calculated foreign exchange reserve requirement is included in the
calculated kuna reserve requirement and allocated in kuna
•
calculation period lasts from the first to the last day of a calendar month
•
maintenance period lasts from the second Wednesday of a month to the day
preceding the second Wednesday of the following month
•
percentage for allocating the kuna component of reserve requirements
amounts to 70%
•
remaining portion of reserve requirements may be maintained by the average daily
balances in the accounts of liquid claims
•
currency of the foreign exchange component of reserve requirements: EUR, USD
•
remuneration rate (rate at which the remuneration is paid) on the allocated kuna
component of reserve requirements: 0.75%
•
the CNB shall not pay remuneration on the allocated foreign exchange
component of reserve requirements.
Credit institutions
are institutions
authorised by the
Croatian National
Bank under the Credit
Institutions Act. Credit
institutions are banks,
savings banks and
housing savings
banks.
4. FOREIGN CURRENCY AUCTIONS
• based on a discretionary decision of the CNB
• held to protect stability of the domestic currency and
maintain liquidity of payments in the country and
abroad
• may be two-sided (the CNB buys and sells foreign
currency) or one-sided (the CNB buys or sells foreign
currency)
The Croatian National Bank account
RESERVE
MONEY /
PRIMARY
MONEY/
MONETARY
BASE /
M0
5. MINIMUM REQUIRED AMOUNT OF
FOREIGN CURRENCY CLAIMS
• minimum amount of foreign exchange
claims of one particular bank: 17% of
its foreign exchange liabilities
• daily obligation to maintain the
prescribed percentage
Euroisation of deposits
Euroisation
of loans
Monetary aggregates in Croatia
• Reserve money (M0) consists of currency outside credit
institutions, cash in credit institutions’ vaults, credit
institutions’ deposits with the CNB and deposits of other
financial institutions with the CNB.
• Money (M1) comprises currency outside credit
institutions, deposits with the CNB by other financial
institutions as well as demand deposits with credit
institutions.
• Broadest money (M4) comprises money (M1), savings
and time deposits, foreign currency deposits as well as
bonds and money market instruments and money
market funds’ shares/ units.