Goal of central bank policy of utmost importance

Published: 3/10/2000

It is of utmost importance that the new Law on the Croatian National Bank defines precisely and unambiguously maintenance of price stability as the main goal of central bank policy in order to eliminate the possibility that the central bank is imposed such monetary policy stance which would result in acceleration of inflation, increase of foreign exchange risk for the enterprise and household sector, loss of credibility and deviation from European standards and integration processes; all other provisions in the Law on the CNB should be subordinated and adapted to the aforementioned goal, said dr. Zeljko Rohatinski, Governor of the Croatian National Bank, at the Tuesday meeting of the Joint Committee of the Croatian National Bank and the Ministry of Finance. The motive for such assessment was the exchange of information between central bank and Finance Ministry officials on the progress achieved so far in preparations of a significant number of legal projects, including the central bank law, which is to be discussed by authorized government institutions already this month.

At the Tuesday meeting, the Commitee also examined the issues related to the production of government budget projection for the next three years, which is in its final stage. The projection is also a part of preparations for the approaching visit of a Mission of the International Monetary Fund. The Mission is expected in Croatia on October 27, 2000.

On the occassion of the Tuesday meeting, the Joint Committee formed a group which will be in charge of drafting a new Domestic Payment System Law. In addition, full support was given to the proposal of the Finance Minister dr. Mato Crkvenac to arrange a meeting of CNB and Finance Ministry officials with representatives of judiciary and banks for the purpose of reviewing the possibilities of ensuring more efficient functioning of the law-governed state in protection of creditors. It was concluded, namely, that the absence of such protection enhances irresponsible behaviour of debtors as well as inadequate financial discipline and averts foreign investors and local banks from more intensive investment in development of the Croatian economy.