At its Wednesday meeting chaired by Governor Dr Željko Rohatinski, the Council of the Croatian National Bank reviewed recent economic and monetary developments, monetary policy projection proposal for the second quarter and the report on the banking system for the last quarter of the previous year. In addition, the CNB Council approved the central bank's financial statements for 2003 and adopted a number of decisions within its field of competence.
Stability of prices is still satisfactory. In March, the exchange rate of the kuna against the euro appreciated by 2.8 percent in nominal terms. In the last month, monetary policy was pursued in conditions of the exchange rate appreciation pressures and reduced bank liquidity, which prompted the central bank to intervene four times by purchasing a total of EUR 162.7m and thus issuing HRK 1.2bn, which resulted in the exchange rate stabilisation.
A seasonal liquidity decrease and purchase of the second tranche of government bonds led to an increased kuna demand, which resulted in money market interest rate rise to its 3-year record high level. Banks' lending interest rates fell in January, only to rise again in February, whereas deposit interest rates on kuna sources of funds increased in both January and February. The first months of this year were marked by a further moderate growth in banks' credit activity.
In the Amendments to the Decision on the Conditions and the Manner of Operations of Authorised Exchange Offices the deadline for the compulsory application of the certified computer softwers has been extended from 3 May 2004 to the beginning of the next year. More specifically, irrespective of the fact that as many as about eighty software companies collected the required documentation upon the public tender invitation by the central bank in July last year and that eighteen of them submitted their tenders by end-December, it has turned out that none of the tested tenders is fully compliant with the prescribed criteria. Numerous and prolonged corrections followed, so that only in the last few days several tendered software packages reached an acceptable level. However, in order to install the software a positive opinion of the Ministry of Finance - Tax Administration on the appropriateness of the tax calculation algorithm should be previously obtained. Taking into account a large number of exchange offices (about 2500) that should be prepared for the application of this software, it has been decided to postpone the application to the next year rather than to introduce the new method of work at the season peak.
The CNB Council accepted the proposals of the respective banks' supervisory boards to appoint Mato Karačić member of the management board of Dresdner Bank Croatia d.d. Zagreb, Davorka Jakir chairman of Požeška banka d.d. Požega, and Marijan Kantolić as chairman and Marijan Trusk as member of the management board of Samoborska banka d.d. Samobor.
Furthermore, an approval was granted for the amalgamation of Zagrebačka banka d.d. Zagreb with Varaždinska banka d.d. Varaždin, where Zagrebačka banka d.d. Zagreb previously acquired majority ownership.