Today the CNB Council decided to introduce additional measures to reduce external borrowing and withdraw excess liquidity from the banking system.

The marginal reserve requirement rate was raised to 40 percent. Previously, banks had been required to allocate 30 percent of their foreign liabilities' net increase to a foreign exchange account held with the central bank. The decision to increase the rate was motivated by the fact that, after a slight decrease at the beginning of the year, external borrowing started accelerating again: the calculation base for the marginal reserve requirement declined from 6.2 billion kuna recorded in January to 5.9 billion kuna in March, only to increase to as high as 8.8 billion kuna in April. This tendency is also confirmed by the April statistics on reported foreign credit arrangements. The increased marginal reserve requirement should make external borrowing less lucrative to banks and also warn them that the central bank is prepared to undertake even more restrictive measures to ensure that the external debt to GDP ratio remains within acceptable limits.

The CNB Council also amended the Decision on Reserve Requirements in view of banks' overnight deposits with the CNB amounting daily to an approximate 900 million kuna and a recently recorded daily liquidity surplus totalling about 1.3 billion kuna. Consequently, the foreign exchange reserve requirement calculation base (allocated in the domestic currency) was increased from 42 to 50 percent. With the increase in foreign exchange supply originating from external borrowing causing considerable appreciation pressures, excessive kuna liquidity might also trigger certain inflation pressures, which may negatively influence the competitiveness of the Croatian economy.

According to the decision of the CNB Council, the remuneration rate for the kuna portion of the reserve requirement allocated with the central bank was reduced from 1.25 to 0.75 percent, and the remuneration rate for the allocated foreign exchange portion of the reserve requirement from the previous 75 to 50 percent of key currencies referential rates (the U.S. Federal Funds Target Rate for the dollar, and the ECB Minimum Bid Refinance Rate for the euro).