CENTRAL BANK BODY CALLS FOR SWIFT REACTION TO LIQUIDITY CHANGES

( Editorial: --> 5640 ) ZAGREB, May 21 (Hina) - The Croatian National Bank's (HNB) Governing Council on Thursday said the central bank had to react to every disturbance of liquidity inside the banking system, in order to retain the confidence of depositors. The HNB Governing Council believes that in Croatia this confidence is more vulnerable than in other market economies due to the bitter experience of local savers, whose deposits had been invalidated by hyperinflation in the former Yugoslavia. Furthermore, they were unable to access their foreign currency accounts. The Governing Council has suggested the HNB help the banks to resolve difficulties which, under more favourable circumstances, would be probably overcome quickly by the banks themselves. Such moves could be of a temporary nature and do not mean that the central monetary institutions have decided to relax financial discipline. The moves are meant to stabilise the situation, so that the main weaknesses in the Croatian banking system could be detected more easily and remedied by appropriate measures, the HNB Governing Council said. It also assessed this stance was in accordance with new measures the central bank had introduced, which are expected to help banks access their funds during temporary liquidity problems. (Hina) jn mb /lm 212055 MET may 98