"Over the past 30 years we have maintained the stability of the banking system, which is highly liquid and well capitalized," Croatia's central bank governor, Boris Vujcic, said on Thursday.

Addressing a conference on the first 30 years of Croatia’s central bank, the governor said that the selection of a stable exchange regime that has accompanied the HNB policy since the very beginning was the important thing that contributed to the development of the HNB and its monetary policy.

We will also have that regime when we enter the euro area, which I believe will happen in a year’s time, Vujcic said.

The stable exchange regime has been a good choice and made it possible for the country to enjoy stabilization after periods of macro-economic instabilities in the former Yugoslav federation which experienced high inflation rates and frequent depreciation of the national currency, which could also be felt in the early 1990s during the war, he explained.

The function of supervision developed by the central bank has helped to keep the stability of the banking system over these 30 years, the governor said.

“We are the only central bank or the only banking system in the European Union to have succeeded in downsizing the number of banks by two thirds, from about 60 to 20, without passing through a financial crisis.”

He went on to say that Croatia’s banking system is highly liquid and well capitalized as well as being in good shape in comparison to average data on banking systems in the euro area.

Vujčić said that Croatia could boast of the stability of prices and exchange rates and stability of the monetary system.

Commenting on the full independence of the HNB, Vujcic said the adoption of the relevant legislation on the central bank in 2001 was the crucial moment for achieving autonomy.

That law enabled the bank to be autonomous in selecting monetary policy mechanisms and in the supervision of commercial banks and the financial system, he added.

Commenting on the recent two crises – the collapse of the Agrokor food and retail conglomerate and the corona crisis, Vujcic said that during the Agrokor case, to which the banking system was strongly exposed,  the HNB reacted in a timely fashion concerning its supervisory role, and the independence of the central bank showed to be important, said Vujcic.

Concerning the Covid-19 pandemic and the subsequent crisis, the HNB made interventions on the state debt market, he recalled.

In that segment, we, in cooperation with the fiscal policy, did a job last year, almost according to textbook instructions, said Vujcic.