Since 1 January 2023, the legal tender in the Republic of Croatia is the euro — the common currency of the euro area Member States.
As regards the payment system of the Republic of Croatia, all domestic and cross-border cashless payment transactions of natural and legal persons are conducted through payment service providers, most commonly the banks while interbank cashless payment transactions are conducted through payment systems: TARGET2, EuroNCS and EuroNCSInst. The operation of the payment system in the Republic of Croatia is regulated by a number of acts, most notably the Payment System Act and the Electronic Money Act. The Croatian National Bank is responsible for regulating the amount of currency in circulation through the banks and for smooth operation of the payment system.
The liquidity surpluses and short-term financial instruments (of maturities up to one year) are traded in the money market. The banks engage in interbank liquidity lending on the so-called interbank market.
Banks meet domestic demand for foreign currency and foreign demand for the domestic currency on the foreign exchange market. Authorised exchange offices, whose operation is regulated by the Croatian National Bank and supervised by the Foreign Exchange Inspectorate of the Ministry of Finance, are also active participants in this market.
Natural and legal persons can also invest in equity and debt instruments traded in the capital market or stock exchanges through mediation of licensed brokers. These instruments are traded on the Zagreb Stock Exchange, and the responsibility for due settlement of securities purchase and sale transactions lies with the Central Depository & Clearing Company (CDCC).
Based on the share of financial sector assets held, the most important financial intermediaries in the Republic of Croatia are credit institutions, most notably the banks. In addition to banks, also present in the Croatian market are one housing savings bank, the Croatian Bank for Reconstruction and Development (HBOR), a development and export bank, and credit institutions from other EU countries. Along with credit institutions, major financial intermediaries, measured by the share of total financial sector assets held, are mandatory and voluntary pension funds, while other financial intermediaries include insurance corporations, investment and money market funds and leasing and factoring companies. An overview of the structure of financial assets of all institutions is available in the table of financial accounts. The operation of all types of non-banking financial intermediaries is regulated and supervised by the Croatian Financial Services Supervisory Agency (Hanfa).
In addition to CNB’s and Hanfa’s activities as regulators, there are other supervisory-regulatory authorities and financial auxiliaries whose actions contribute to the smooth functioning and wholesomeness of the financial system: Croatian Deposit Insurance Agency (HAOD), its primary function is to protect depositors against the loss of deposits in the event of a credit institution’s failure, and the Directorate for Economy and Financial System of the Ministry of Finance, responsible for preparing legislative proposals in the area of financial operations. The institutions representing the interests of the banking sector in relation to supervisory-regulatory institutions and the public are the Croatian Banking Association (CBA) and the Croatian Banking Association at the Croatian Chamber of Economy (CCE). Other institutions specialised for the provision of services to participants in the financial markets and in regular operations include the Croatian Registry of Credit Obligations (HROK), the Central Registry of Insured persons (Regos) and the Financial Agency (Fina).