Croatia: Central Bank Introduces Mandatory Reserve On Issued Securities For Banks
As expected, the central bank has decided to introduce a mandatory reserve to be paid by commercial banks for each share of issued securities.
As expected, the central bank has decided to introduce a mandatory reserve to be paid by commercial banks for each share of issued securities. The banks will have to set aside a sum equal to 55% of the increase in the daily average value of issued securities as compared to the average in the period Jan. 1- 31. The reserves should be deposited at the central bank beginning in March. The central bank noted that the measures aimed at preventing further foreign debt growth as banks use debt securities issues for funding their credit activities thus avoiding the restrictions already imposed by the bank.
In 2005, the central bank increased the marginal reserve requirement on the increase in foreign liabilities, and the minimum required foreign currency claims relative to their foreign liabilities. However, the moves did not give the desired results and the central bank said that the bank credits to the non-banking sector grew by 17.2% year-over-year. More than half of the credits were household credits, their growth reaching 20.3% y/y. Credits to corporate sector soared by 14.3% y/y. The central bank voiced concern that the growth continued in January too, adding that in the first 20 days of the month, bank credits soared by 17.9% as compared to end-January last year.