Just how is the Croatian banking system doing in these tying coronavirus-dominated times?
As Poslovni Dnevnik writes on the 17th of March, 2020, the Croatian National Bank’s Governor Boris Vujcic said that since the beginning of last week, there has been some stronger pressure on the kuna exchange rate. He also stated that the CNB has intervened and stabilised the exchange rate and announced that it will continue to work.
According to Vujcic, the Croatian banking system is currently very stable and that, despite the coronavirus epidemic which is rocking the global economy, there is currently no threat to its normal functioning, so residents certainly do not need to withdraw their cash from banks.
”As for the Croatian banking system, it’s very well capitalised and very stable and there’s no need for residents to start withdrawing their money from banks. At the moment, we don’t see any problems that could jeopardise any normal functioning, regardless of what will happen with the virus or the epidemic,” Vujcic told reporters.
“The kuna exchange rate will remain as stable as it has been for the last quarter of a century,” Vujcic assured strongly.
Namely, since the beginning of last week, the CNB has carried out four foreign exchange interventions, through which more than 1.6 billion euros were sold to banks, bringing a total of 12.2 billion kuna out of the Croatian banking system, and yesterday, after two weeks of the weakening of the kuna, it managed to strengthen against the euro.
Vujcic said that the CNB had very high foreign currency reserves, as well as the ability to create liquidity as and when needed.
When asked about the proposals for the postponing of loan repayments and the request of a state guarantee scheme, Vujcic replied that the state guarantees should be discussed with the state, but also said that the Croatian banking system and the population as a whole are currently in an unusual situation thanks to coronavirus.
“It’s in everyone’s interest to overcome this situation by postponing some claims/loans that exist against those who will not be able to do business in due time due to the epidemic,” Vujcic said, adding that despite the current issues, he believes that the economy then has the capacity to overcome it.
He believes that it is reasonable to expect a budget rebalance, as well for the CNB to accordingly adjust its economic growth projection, which it will do when the time comes.
“If the cycle of this epidemic is the same as we’ve seen in other countries, then we could see an economic recovery in the third quarter, but it depends a lot on the length of that cycle. The sooner it’s over, the sooner the recovery will begin,” Vujcic said.
He expects that the Croatian economy will see some structural changes, such as a likely increase in agricultural production, which he hopes will remain as such even after the coronavirus crisis passes, in the sense that it will increase Croatia’s self-sufficiency in this regard.
Make sure to follow our business page for more on the Croatian banking system and our dedicated section for information on coronavirus in Croatia.
