The Finance Ministry on Tuesday sold HRK 1.1 billion worth of treasury bills at an auction, at a low interest of 0.2% owing to a record high surplus of the liquidity in the system.

With HRK 983 million of treasury bills falling due soon, the ministry offered a billion kuna with one year’s maturity. Financial institutions submitted bids worth HRK 1.1 billion and the ministry accepted them all.

The bills were issued with one year’s maturity at the average interest rate of only 0.20%, same as at the last auction, held in late June.

The same terms and conditions applied for the bills at the latest auction as a result of a record high surplus liquidity in the Croatian system, exceeding HRK 84 billion.

In July, the Croatian National Bank (HNB) decided on imposing the reserve requirement rate of 5% from 10 August to 13 December 2022.

Reserve requirements refer to the obligation of credit institutions to deposit a certain percentage of received funds (received sight and time deposits, received loans, etc.) in accounts held with the Croatian National Bank.

Thus, the reserve requirement rate will be cut from 9% to 5% in August for commercial banks, and in December the rate will be further cut to 1%, exactly as in the reserve requirement rate in the euro area. The European Central Bank applies a uniform positive minimum reserve ratio, which stands at 1%.

The effect of the HNB measure is the release of HRK 34.2 billion from the reserves of commercial lenders in Croatia.

The balance of subscribed treasury bills has now increased by HRK 117 million, to HRK 12.59 billion.

(€1 = HRK 7.51)