Central Bank Objectives and Structure Overview
This presentation covers the objectives and structure of central banks, focusing on key tasks such as stability of prices, supporting economic policies, managing reserves, issuing licenses, and regulating the financial system. It also discusses the importance of independence in decision-making and the organizational structure of a central bank.
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Presentation Transcript
1 Standard presentation format 3rd quarter 2022
2 Central bank s objectives and structure Real sector Agenda Monetary policy External sector Banking sector
3 CENTRAL BANK S OBJECTIVES AND STRUCTURE Central bank s objectives and tasks Stability of prices Supporting the general economic policies of the European Union, without prejudice to its primary objective Management of the international reserves Issuing banknotes and coins Issuing and revoking licenses for banks and bank supervision Regulating, improving and supervising the payment system Maintaining the stability of the country's financial system Performance of operations on behalf of the Republic of Croatia, as provided by law
4 CENTRAL BANK S OBJECTIVES AND STRUCTURE Independence of the CNB Institutional: decisions are reached independently of other institutions influence Functional: clear by defined goal and independence in choosing the instruments and measures for achieving that goal Personal: guarantees the protection of the Governor and the Council members from various kinds of pressure, precisely determines the conditions for the appointment and removal from office, and guards against the conflict of interest Financial: revenues and expenditures of the CNB are solely determined by the nature of the monetary and exchange rate policies
5 CENTRAL BANK S OBJECTIVES AND STRUCTURE Structure of the CNB Deputy Governor GOVERNOR Vicegovernor Vicegovernor Vicegovernor Vicegovernor Vicegovernor Vicegovernor Chief Operating Officer Chief Economist Statistics Area Prudential Regulation and Methodology Area Foreign Exchange Regulation Office Central Banking Operations Area International Relations Area Legal Area Currency Area Controlling and Accounting Area Research Area Credit Institutions Resolvability Assessment Office Information Technology Area Prudential Supervision Area Communications Area Succession Issues Coordination Office Consumer Protection Monitoring Office Support Services Area Office of the Governor Expert Supervision and Oversight Area Compliance Office Security Office Internal Audit Office Payment Operations Area Office for Coordination of Prudential Supervision, Oversight and Risk Management Activities Visitors Centre
6 Organizational chart of the CNB
7 Aggregate demand and supply Labour market Real sector Prices Fiscal policy
8 REAL SECTOR Real GDP rates of change Croatia Peer countries 15 5 4 10 3 5 % % 2 0 1 -5 0 Croatia Bulgaria Poland Czech R. Romania Slovenia Hungary Slovak R. -10 2022* 2004 2005 2006 2007 2012 2013 2014 2015 2020 2021 2002 2003 2008 2009 2010 2011 2016 2017 2018 2019 *The data refer to the first two quarters of 2022. Note: The data are according to ESA 2010 methodology, from 2019 are provisional. More information can be found on www.dzs.hr. Source: CBS. Average annual growth rate, 2003 2021 Note: The data are according to ESA 2010 methodology. Sources: Eurostat and CBS.
9 REAL SECTOR Gross value added structure In current prices, 2022 A Agriculture, forestry and fishing B Mining and quarrying C Manufacturing D Electricity, gas, steam and air conditioning supply E Water supply; sewerage, waste management and remediation activities F Construction G Wholesale and retail trade; repair of motor vehicles and motorcycles H Transportation and storage I Accommodation and food service activities J Information and communication K Financial and insurance activities L Real estate activities M Professional, scientific and technical activities N Administrative and support service activities O Public administration and defence; compulsory social security P Education Q Human health and social work activities R Arts, entertainment and recreation S Other service activities T Activities of households as employers; undifferentiated goods and services producing activities of households for own use A B, C, D, E F G, H, I J K L M, N O, P, Q R, S, T, U U Activities of extraterritorial organisations and bodies *The data refer to the first two quarters of 2022. Source: CBS.
10 REAL SECTOR Contributions of domestic and net foreign demand to GDP growth 16 12 8 percentage points 4 0 -4 -8 -12 -16 2022* 2007 2008 2012 2013 2017 2018 2003 2004 2005 2006 2009 2010 2011 2014 2015 2016 2019 2020 2021 Domestic demand Net foreign demand GDP *The data refer to the first two quarters of 2022. Source: CBS.
11 REAL SECTOR Unemployment rate ILO unemployment rate, peer countries, 2021 Croatia 25 10 20 8 15 % 10 6 % 5 4 0 1997 1999 2002 2004 2006 2009 2011 2013 2014 2016 2018 2020 2021 1996 1998 2000 2001 2003 2005 2007 2008 2010 2012 2015 2017 2019 2 Registered unemployment rate ILO unemployment rate 0 Croatia Bulgaria Poland Slovak Romania Czech R. Slovenia Hungary Note: Since the beginning of 2007 results from the Labour Force Survey have been published in quarterly dynamics. ILO unemployment rate refers to persons aged 15 years and over. Data on ILO unemployment rate for 2021 refers to the first three quarters. Data on ILO unemployment rate for period 2007-2014 have been harmonised with the results of the Census of Population, Households and Dwellings in 2011,and are not comparable with data for period 2000-2006. Data for 2015 and 2016 have been revised due to availability of new estimates of the total population in Republic of Croatia. Data from the first quarter of 2021 is according to the new methodology. Data on administrative unemployment rate is revised for the period between January 2016 until December 2020. Source: CBS. R. Note: ILO unemployment rate refers to persons aged 15 74. Source: Eurostat.
12 REAL SECTOR Nominal and real net wages 16 8000 7500 14 7000 12 6500 10 6000 *Last available data is for wages paid for August. Note: Data on average wages paid for January 2020 were reported in full-time equivalent, in contrast with the previous periods, when average wages were calculated by dividing total disbursements by the number of employees who received these disbursements, excluding all those who worked fewer than 80 hours per month. Sources: CBS and CNB. 8 5500 6 % HRK 5000 4 4500 2 4000 0 3500 -2 3000 -4 2500 2022* 1999 2002 2005 2007 2010 2012 2015 2017 2020 2000 2001 2003 2004 2006 2008 2009 2011 2013 2014 2016 2018 2019 2021 Real growth rate left Nominal net wage right
13 REAL SECTOR Average monthly compensation per employee in economy, 2021 2.800 2.600 2.400 2.200 2.000 1.800 EUR 1.600 Note: Average monthly compensation per employee in economy is calculated as a ratio of total monthly compensation paid to employees and number of employees. Source: Eurostat. 1.400 1.200 1.000 800 600 400 200 0 Croatia Bulgaria Poland Slovak R. Czech R. Romania Hungary Slovenia
14 REAL SECTOR Gross value added in industry per person employed 10 8 6 4 percentage change 2 0 -2 -4 -6 -8 -10 -12 2022* 2007 2009 2014 2016 2021 2004 2005 2006 2008 2010 2011 2012 2013 2015 2017 2018 2019 2020 GVA in industry Employment GVA in industry per person employed *The data refer to the first two quarters of 2022. Source: CBS.
15 REAL SECTOR Inflation Croatia Year-on-year inflation rates and components contribution to consumer price inflation in Croatia 12 14 10 13 12 11 8 10 Core inflation 9 percentage points 8 6 7 % 6 4 5 4 3 2 2 1 0 0 -1 -2 -2 2015 2016 2017 2018 2019 2020 2021 2022 2010 2011 2014 2015 2017 2018 2021 2022 2008 2009 2012 2013 2016 2019 2020 Industrial non-food without energy Services Energy Unprocessed food Processed food Consumer price index (%) *Data for 2022 refer to January-September. Note: CPI inflation and core inflation, average year-on-year rate of change. Source: CBS. Sources: CBS and CNB's calculation.
16 REAL SECTOR Inflation in Croatia, euro area and peer countries 15 14 13 12 11 10 9 8 7 6 % Note: Average year-on-year rate of change. Inflation is measured by harmonized consumer price index. Data for 2022 refer to January-September. Source: Eurostat. 5 4 3 2 1 0 -1 -2 Bulgaria Croatia Slovak R. Poland Romania Euro area Czech R. Hungary Slovenia 2020 2021 2022
17 REAL SECTOR Consolidated general government revenues and expenditures Croatia Peer countries, 2021 60 60 50 50 40 40 % of GDP % of GDP 30 30 20 20 10 10 0 0 Repubic Bulgaria Croatia Poland Republic Romania Hungary Slovenia Expenditures Slovak Czech 2008 2009 2010 2016 2017 2018 2011 2012 2013 2014 2015 2019 2020 2021 Revenues Revenues Expenditures Note: According to the ESA 2010 methodology. Sources: Eurostat and CBS. Note: According to the ESA 2010 methodology. Sources: Eurostat and CBS.
18 REAL SECTOR Consolidated General Government Balance Croatia Peer countries, 2021 2 0 1 -1 0 -2 -1 -3 -2 % of GDP -4 -3 % of GDP -5 -4 -6 -5 -7 -6 -8 -7 -9 -8 -10 -9 Repubic Bulgaria Croatia Poland Republic Romania Hungary Slovenia Slovak Czech 2008 2009 2010 2011 2012 2019 2020 2021 2013 2014 2015 2016 2017 2018 Net lending/borrowing, ESA 2010 Note: According to the ESA 2010 methodology. Sources: Eurostat and CBS. Note: According to the ESA 2010 methodology. Sources: Eurostat and CBS.
19 REAL SECTOR General government debt Croatia Peer countries, 2021 100 100 90 90 80 80 70 70 60 60 % of GDP 50 % of GDP 50 40 40 30 30 20 20 10 10 0 2008 2010 2012 2014 2016 2018 2020 2009 2011 2013 2015 2017 2019 2021 0 Repubic Croatia Poland Bulgaria Romania Hungary Republic Slovenia Slovak Czech General government debt General government debt including government guaranteed debt Note: The data has been revised since December 2001 due to the additional harmonization of coverage of general government sector to ESA 2010 standard. Sources: Eurostat and CBS. Note: The data for Croatia has been revised since December 2001 due to the additional harmonization of coverage of general government sector to ESA 2010 standard. Sources: Eurostat and CBS.
20 Central bank s policy Monetary policy Monetary developments Interest rates
21 MONETARY POLICY Foreign exchange interventions and exchange rate 4 7.75 3 7.70 2 7.65 1 7.60 billion HRK EUR/HRK 0 7.55 -1 7.50 -2 7.45 -3 7.40 -4 7.35 -5 7.30 2015 2016 2017 2018 2019 2020 2021 2022 Foreign exchange interventions - left Exchange rate - right Source: CNB.
22 MONETARY POLICY Exchange rate movements before CNB intervention and amount of intervention, 2015 2022 1.2 1.0 EUR/HRK exchange rate, change, % 0.8 0.6 0.4 0.2 Exchange rate of the intervention day relative to exchange rate 4 days prior to intervention (y-axis) and the intervention amount (x-axis). Source: CNB. 0.0 -0.2 -0.4 -0.6 -0.8 -1.0 -6.000 -4.000 -2.000 0 2.000 4.000 6.000 intervention, in million HRK (positive value indicates that CNB buys foreign exchange)
23 MONETARY POLICY Creation and withdrawal of reserve money 20 15 creation 10 Note: The possibility of using Lombard credits was abolished, while the possibility of using overnight credits was introduced on 28 September 2017. Values for the regular and structural operations, as well as lombard/overnight credits are shown as change in one quarter. Foreign exchange transactions include purchases and sales of foreign currency by the CNB with credit institutions, MF, EC and swap agreements. Positive values reflect the purchase of foreign currency. Source: CNB. 5 billion HRK 0 withdrawal -5 -10 -15 2015 2016 2017 2018 2019 2020 2021 2022 Purchases of securities Regular and structural operations and lombard/overnight credits Foreign exchange transactions of the CNB
24 MONETARY POLICY Reserve requirements and minimum f/c liquidity 80 80 70 70 60 60 50 50 40 40 % % 30 30 20 20 10 10 0 0 2015 2016 2017 2018 2019 2020 2021 2022 Reserve requirement Marginal reserve requirement Minimum foreign currency liquidity % of RR in f/c allocated in HRK Source: CNB.
25 MONETARY POLICY Liquidity surplus and overnight interest rate 1.7 90 1.5 80 1.3 70 1.1 60 billion HRK 0.9 50 % Note: Until the end of 2015 the overnight interest rate refers to the interbank overnight interest rate, while from the beginning of 2016 it refers to the interest rate on overnight interbank demand deposit trading. Source: CNB. 0.7 40 0.5 30 0.3 20 0.1 10 -0.1 0 2015 2016 2017 2018 2019 2020 2021 2022 Overnight interest rate - left Liquidity surplus (including overnight deposits with the CNB) right
26 MONETARY POLICY Base money M0 160 140 120 100 billion HRK 80 60 40 20 0 2015 2016 2017 2018 2019 2020 2021 2022 Other deposits CNB bills on obligatory basis Settlement accounts Currency outside credit institutions Overnight deposits Statutory reserves in HRK Credit institutions' cash in vaults Source: CNB.
27 MONETARY POLICY CNB's international reserves and money supply 30 26 22 billion EUR 18 14 10 6 2015 2016 2017 2018 2019 2020 Money supply 2021 2022 International reserves Source: CNB.
28 MONETARY POLICY Other monetary financial institutions' assets 600 550 500 450 400 billion HRK 350 300 250 200 150 100 50 0 2015 2016 2017 2018 2019 2020 2021 2022 Claims on central government Claims on other domestic sectors Foreign assets Reserves and other assets Source: CNB.
29 MONETARY POLICY Placements to other domestic sectors (excluding government) Placements to other domestic sectors Placements-to-GDP ratio 100 280 12 10 240 80 8 200 6 60 billion HRK 4 % 160 % 2 40 120 0 -2 20 80 -4 40 0 -6 Bulgaria Croatia Poland Latvia Slovak R. Lithuania Romania Czech R. Estonia Hungary Slovenia 0 -8 2015 2016 2017 2018 2019 2020 2021 2022 Placements left Year-on-year rate of change right 2020 2021 Note: One-off effects substantially decreased the stock of placements and in 2015 and 2016 they relate to partial write-off of loans to households indexed to the Swiss Franc. Source: CNB. Sources: Eurostat, ECB, CNB and CBS.
30 MONETARY POLICY Loans of other monetary financial institutions 25 20 year-on-year rate of change 15 10 Note: One-off effects substantially decreased the stock of placements in 2015 and 2016 they relate to partial write-off of loans to households indexed to the Swiss Franc. Source: CNB. 5 0 -5 -10 2015 2016 2017 2018 2019 2020 2021 2022 Household loans Corporate loans
31 MONETARY POLICY Loans to households - structure 160 140 120 billion HRK 100 80 60 40 20 0 2015 2016 2017 2018 2019 2020 2021 2022 Mortgage loans Car loans Other loans Housing loans Source: CNB.
32 MONETARY POLICY Currency structure of other monetary financial institutions' placements 100 90 80 70 60 Note: Loans in foreign currency include loans denominated in that currency and loans indexed to that currency. Source: CNB. 50 % 40 30 20 10 0 2015 2016 2017 2018 2019 2020 2021 2022 EUR CHF HRK Other currencies
33 MONETARY POLICY Broad money (M4) 450 400 350 billion HRK 300 250 200 150 100 50 0 2015 2016 2017 2018 2019 2020 2021 2022 Bonds, money market instruments and MMFs shares F/c deposits* Kuna deposits Money supply (M1) Source: CNB.
34 MONETARY POLICY Euroisation 90 85 80 75 excluding kuna deposits with a currency clause 70 % 65 60 55 50 45 40 2015 2016 2017 2018 2019 2020 2021 2022 Share of f/c deposits in total savings and time deposits Share of f/c deposits in M4 Source: CNB.
35 MONETARY POLICY Average lending interest rates 10 8 6 % Note: Details about the new interest rate statistics: Bulletin 204, June 2014 (http://www.hnb.hr/publikac/bilten/arhiv/bilten- 204/hbilt204.pdf). Source: CNB. 4 2 0 2015 2016 2017 2018 2019 2020 2021 2022 Short-term corporate loans without a currency clause Short-term household loans without a currency clause Long-term corporate loans with a currency clause Long-term household loans with a currency clause
36 MONETARY POLICY Average deposit interest rates 4.5 4.0 3.5 3.0 2.5 % Note: Details about the new interest rate statistics: Bulletin 204, June 2014 (http://www.hnb.hr/publikac/bilten/arhiv/bilten- 204/hbilt204.pdf). Source: CNB. 2.0 1.5 1.0 0.5 0.0 2015 2016 2017 2018 2019 2020 2021 2022 Kuna time deposits Kuna sight deposits Foreign currency time deposits Foreign currency sight deposits
37 MONETARY POLICY Interest rate spread 8 7 6 percentage points 5 * without a currency clause ** with a currency clause Note: Details about the new interest rate statistics: Bulletin 204, June 2014 (http://http://www.hnb.hr/publikac/bilten/arhiv/bilten- 204/ebilt204.pdf). Source: CNB. 4 3 2 1 2015 2016 2017 2018 2019 2020 2021 2022 Kuna loans* kuna deposits* Total loans total deposits Kuna loans** f/c deposits
38 MONETARY POLICY Yield on T-bills and kuna government bond 5 4 3 % 2 T-bills, bonds - average price in a month. Sources: MoF and ZSE. 1 0 2015 2016 2017 2018 2019 2020 2021 2022 T-bill - 182 days T-bill - 364 days T-bill 91 day T-bill - 728 days BND - 5 years BND - 10 years
39 MONETARY POLICY Bonds listed on the ZSE Nominal value (millions) Nominal interest rate Nominal value (millions) Nominal interest rate Original maturity Year of issue Original maturity Issuer Year of issue Currency Issuer Currency State Republic of Croatia Republic of Croatia Republic of Croatia Republic of Croatia Republic of Croatia Republic of Croatia Republic of Croatia Republic of Croatia Republic of Croatia Republic of Croatia Republic of Croatia Republic of Croatia Republic of Croatia Republic of Croatia Republic of Croatia Republic of Croatia Corporate Dalekovod d.d. Dalekovod d.d. Zagreba ki holding d.o.o. LANI TE d.o.o. Erste&Steierm rkische banka d.d. Erste&Steierm rkische banka d.d. Jadran Galenski laboratorij d.o.o. Samoborka d.d. Atlantic Grupa d.d. HOK-OSIGURANJE d.d. Erste&Steierm rkische banka d.d. M San Grupa d.o.o INA d.d. SAMOBORKA d.d. Agro Invest Grupa d.o.o. Meritus ulaganja d.d. 2013 2015 2015 2017 2017 11 years 10 years 11 years 11 years 15 years 6 years 11 years 5 years 15 years 5 years 20 years 7 years 7 years 8 years 4 years 10 years EUR HRK HRK HRK HRK HRK HRK HRK HRK HRK EUR EUR HRK HRK EUR EUR 1.400 6.000 10.000 5.500 3.000 11.300 10.000 3.500 7.500 5.000 800 1.445 9.000 1.000 400 800 5.750% 4.500% 4.250% 2.875% 3.250% 1.750% 2.375% 0.250% 1.000% 0.250% 1.250% 0.750% 0.500% 1.250% 2.125% 3.375% 2014 2014 2016 2016 2017 2018 2019 2019 2020 2020 2021 2021 2021 2021 2022 2022 15.3 years 15.3 years 7 years 16.2 years 5 years 5 years 5 years 5 years 5 years 5 years 5 years 5 years 5 years 5 years 7 years 5 years HRK EUR HRK EUR EUR HRK HRK EUR HRK HRK EUR HRK HRK EUR HRK EUR 16 1 4.000% 4.000% 3.875% 4.500% 1.813% 1.500% 1.750% 5.900% 0.875% 3.750% 0.750% 2.000% 0.875% 5.500% 3.500% 4.250% 2.300 55 50 300 130 2017 and 2018 2018 and 2019 2019 2019 2020 2020 2020 2021 2022 2022 2022 7 300 17 45 200 2.000 2 170 40 Municipal Stock as at October 18th 2022 Source: ZSE. Stock as at October 18th 2022 Source: ZSE.
40 Exchange rate Foreign trade External sector Current account External debt FDI
41 EXTERNAL SECTOR Exchange rate policy Managed floating Exchange rate is market determined and based on supply and demand Central bank intervenes on the forex market through forex auctions, but it does not defend any predetermined rate or band
42 EXTERNAL SECTOR Foreign exchange market Kuna is fully convertible No restrictions on repatriation of profits and liquidation of investments Banks freely determine the exchange rate, engage in the foreign exchange operations and conduct international payment transactions
43 EXTERNAL SECTOR Current and capital account balance and FDI liabilities 8 6 4 2 0 % of GDP -2 Note: According to BPM6 and ESA 2010 methodology. The FDI liabilities data doesn t include round tripping. Negative values of FDI liabilities indicate inflow of FDI. Source: CNB. -4 -6 -8 -10 -12 2008 2010 2015 2017 2009 2011 2012 2013 2014 2016 2018 2019 2020 2021 Current and capital account balance (in % of GDP) FDI liabilities (in % of GDP)
44 EXTERNAL SECTOR Structure of the current and capital account balance 20 15 10 billion EUR 5 0 -5 -10 -15 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Goods Services Primary income Secondary income Capital transactions Current and capital account Source: CNB.
45 EXTERNAL SECTOR Current and capital account balance by countries, 2021 8 6 4 % of GDP 2 0 -2 -4 -6 Croatia Bulgaria Poland Slovak R. Romania Slovenia Hungary Czech R. Sources: Eurostat and CNB.
46 EXTERNAL SECTOR Daily nominal exchange rates HRK vs. EUR, USD and CHF 8.0 7.5 CNB midpoint exchange rate 7.0 6.5 6.0 5.5 5.0 4.5 4.0 2010 2011 2014 2015 2018 2021 2022 2005 2006 2007 2008 2009 2012 2013 2016 2017 2019 2020 EUR/HRK USD/HRK CHF/HRK Source: CNB.
47 EXTERNAL SECTOR Index of nominal and real effective kuna exchange rate 135 130 125 120 index, 2010 = 100 115 Note: The real effective exchange rate of the kuna deflated by producer prices is based on the Croatian index of industrial producer prices on the total market. The unit labour cost (ULC) is defined as the ratio of labour costs to labour productivity (expressed as GDP per employee). Source: CNB. 110 105 100 95 90 2005 2006 2007 2008 2009 2021 2022 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Nominal Real, consumer prices Real, producer prices Real, unit labour costs in total economy Real, unit labour costs in manufacturing
48 EXTERNAL SECTOR Index of real effective exchange rate deflated by CPI 140 140 130 130 index, 2010 = 100 index, 2010 = 100 120 120 110 110 100 100 90 90 80 80 2008 2009 2010 2015 2016 2017 2018 2005 2006 2007 2011 2012 2013 2014 2019 2020 2021 2022 2005 2007 2009 2011 2018 2020 2022 2006 2008 2010 2012 2013 2014 2015 2016 2017 2019 2021 Czech R. Hungary Poland Romania Croatia Bulgaria Estonia Latvia Lithuania Slovak R. Slovenia Note: The fall of index denotes real effective appreciation. Sources: BIS and CNB.
49 EXTERNAL SECTOR Merchandise trade 4.000 3.000 2.000 million EUR 1.000 Note: Seasonally adjusted data. Sources: CBS and CNB. 0 -1.000 -2.000 2015 2016 2017 2018 2019 2020 2021 2022 Exports (f.o.b.) Imports (c.i.f) Balance
50 EXTERNAL SECTOR Gross external debt by debtors 55 50 45 40 35 billion EUR 30 25 20 Note: According to BPM6 and ESA2010 methodology. Source: CNB. 15 10 5 0 2009 2012 2017 2020 2008 2010 2011 2013 2014 2015 2016 2018 2019 2021 General government Deposit-taking corporations, except the central bank Direct investments Croatian National Bank Other sectors
