ZAGREB, April 18 (Hina) - The Governor of the Croatian National Bank (HNB), Marko Skreb, told Tuesday's session of the House of Representatives he cannot submit his resignation until the MPs seeking his resignation clearly state the
reasons why he should leave his post. Over the past four years, the HNB has maintained the stability of prices and the kuna exchange rate, it has significantly increased international reserves, preserved the country's international liquidity, and contributed to avoiding a system crisis in the banking sector, Skreb said, presenting a report on the work of the HNB in 1998 and the first six months of 1999. Two crises in the banking sector have cost Croatia about US$5.5 billion or slightly less than one third of its Gross Domestic Product (GDP), the Governor said. The total cost of those two crises places Croatia among countries with the highest expenses in resolving banking crise
ZAGREB, April 18 (Hina) - The Governor of the Croatian National Bank
(HNB), Marko Skreb, told Tuesday's session of the House of
Representatives he cannot submit his resignation until the MPs
seeking his resignation clearly state the reasons why he should
leave his post.
Over the past four years, the HNB has maintained the stability of
prices and the kuna exchange rate, it has significantly increased
international reserves, preserved the country's international
liquidity, and contributed to avoiding a system crisis in the
banking sector, Skreb said, presenting a report on the work of the
HNB in 1998 and the first six months of 1999.
Two crises in the banking sector have cost Croatia about US$5.5
billion or slightly less than one third of its Gross Domestic
Product (GDP), the Governor said. The total cost of those two crises
places Croatia among countries with the highest expenses in
resolving banking crises, Skreb added.
The first crisis, which occurred at the beginning of the transition
process, when problems inherited from the former economic system
were being solved, cost about US$4.6 billion, and the second,
recent one cost some US$800 million, the Governor said.
Skreb estimates that the central bank could not prevent the second
crisis because it did not have sufficient powers for the control of
banks. All the more so because some bank managements intentionally
violated regulations for their own gain, and there were also
political pressures on the HNB to act in violation of the law, Skreb
said.
It was only with the new law on banks, adopted in late 1998, that the
central bank could take more effective measures toward commercial
banks, Skreb said, adding the situation in the banking system was
currently much better than in the previous two years, let alone the
past five or ten years.
Speaking about the monetary policy, Skreb said the central bank had
been maintaining stable prices and a stable kuna exchange rate for
years, despite public statements about devaluation. The exchange
rate policy cannot solve the structural problems of economy, Skreb
said. Neither can the illiquidity problem be solved by the monetary
policy or by a mere printing of money, which some are urging for.
This is a matter of financial discipline and the rule of law, Skreb
stressed.
The monetary policy is a powerful instrument and it therefore
should not be faced with tasks it cannot carry out, and the abuse of
that policy leads to inflation, which is nothing but the robbing of
the most destitute categories of society, the Governor said.
That is why the stability of the exchange rate and prices has to be
preserved, structural changes accelerated, and HNB's role in
controlling banks strengthened, Skreb said, calling for a peaceful
and argumented debate on the work of the central bank.
(hina) jn rml