CRO. CENTRAL BANK DECIDES ON NEW MONETARY POLICY MEASURES

ZAGREB, Sept 21 (Hina) - The Croatian National Bank (HNB) Council on Wednesday decided to introduce as of November 8 a uniform system of legal reserves on deposits in domestic and foreign currencies. This reduces the role legal reserves play as a relatively rigid and expensive instrument of monetary policy. The decision provides a significant change in the instruments of the central bank's monetary policy. The changes should release a significant amount in relation to earmarking for legal reserves in the past, expected to reach close to 900 million kuna ($105.9 million). The HNB believes the time of the decision's coming into effect favours the implementation of unification projects without affecting the stability of prices and the currency rate. The central bank retains enough room with the instruments at its disposal to prevent possible undesired trends. The uniform system will make the legal reserve instrument more effective and transparent, thus providing conditions for a further, gradual reduction of the rate at which the reserve is earmarked. In the future, a uniform rate will be applied in earmarking legal reserves on domestic and foreign currency deposits. The uniform rate will be 23.5 percent, instead of the former 28.5 on domestic and 55 percent on foreign currency deposits. In the October 1-31 interim period accounting, a 26.5 percent rate will be applied for legal reserves in the domestic currency. (hina) ha jn