At its meeting held on Wednesday, the Council of the Croatian National Bank, chaired by Governor Željko Rohatinski, PhD, adopted the Decision on the Amendments to the Decision on Reserve Requirements, whereby the reserve requirement rate for foreign exchange liabilities of banks allocated in kuna was increased from 25% to 35%.

In accordance with the commitment assumed under paragraph 14 of the Supplementary Memorandum of Economic and Financial Policies (SMEFP), submitted by the Government of Republic of Croatia and the Croatian National Bank to the International Monetary Fund on 14 July 2003, this decision is the first in the line of measures which the CNB intends to implement as deemed necessary.

The paragraph 14 of the SMEFP reads as follows: "The measure introduced in early 2003 to slow down credit expansion is temporary. The CNB intends to replace it by prudential and more priced-based measures at the end of 2003. In the meantime, the CNB will not hesitate to enhance the effects of the current measure by tightening banking sector liquidity through an increase in minimum reserve requirements if warranted by developments in domestic inflation, credit growth and the external current account balance. To this end, the second review under the program will focus on any monetary and other measures that may be needed to keep external developments in line with program targets."