It is unacceptable for the state to indirectly subsidise banks through the Croatian National Bank (HNB), Finance Minister Marko Primorac told the Jutarnji List daily, noting that citizens can expect a new people's bond and that turnover in the tourism sector during the peak season has gone up 20%.

Indirect state subsidising of the banks for keeping surplus liquidity at the HNB as a way of curbing inflation is definitely not an optimal policy at the moment, particularly as the key interest rates are not the only instrument available to the Eurosystem, Primorac said in an interview with the Saturday issue of Jutarnji List.

He believes that an alternative, and in the current conditions definitely a much better option, would be to raise the rate of required reserves, which would increase the reserves that banks must keep with the central bank without remuneration in order to increase banking system safety.

“Even though I have presented this position several times at meetings with euro area finance ministers, without any intention to interfere in the autonomy of monetary policy, this issue is possible to resolve only at the level of the central banks’ governors,” Primorac said.

The minister said that intensive work was underway on a system that would enable short-term state borrowing from citizens, with a maturity period of up to one year, through treasury bill auctions.

We will thus offer citizens an alternative form of investment in relation to deposits in commercial banks, but one should make it clear that it is illusory to expect that the surplus liquidity will disappear entirely and even more so that the state will absorb it by borrowing, Primorac said.

Speaking of fiscal receipts issued so far during this year’s tourist season, Primorac said that the number of receipts in early August was down by 1.6% compared to the same period of 2022 but that their value was around 20% higher.