That is a legacy of what we had to do before, and what we learned along the way: Croatian banks have an average CAR of approximately 24%, My preferred measure of bank capitalization – leverage ratio, 12%, LCR is approximately 240%, C/I ratio 47% and the latest ROE 14% And banks are still lending almost as there was no tightening. Another lesson that we clearly learned is that well capitalized banks lend more than poorly capitalized ones. 4. However, in the last six months, we have also learned that the euro area is to a significant degree still a fragmented market in which we also risk negative spillovers. Therefore, we should do as much as possible to make it a smooth, functional single money and banking market. Otherwise, we have a different transmission of monetary policy and potentially different resolution issues, which can create political tensions and reduce degrees of freedom for optimal policymaking. In other to achieve that, completing the banking union is necessary, and so is making sure that the SRB is operationally capable of resolving banks in a timely manner in a similar way, and similar cost structure across the whole banking union. Aligning the national regulations across different countries is necessary in many areas. And, of course, breaking the national banks / national public debt nexus is as necessary as it ever was. All of that is not easy and requires a lot of work on all sides.
Governor Boris Vujčić's speech at the FBF Executive Seminar Published: 4/7/2023  Governer Vujčić held a keynote speech at the FBF Executive Seminar "European finance in 2020s: new risks in a volatile world" organized by Florence School of Banking and Finance - The European University Institute on the 29 June 2023 Keynote speech at the Florence School of Banking and Finance Executive Seminar June 29, 2023  Introduction Over the last ten days that I have been on the road I spoke about CBDC to bankers, about the war in Croatia and economic lessons for the Ukraine, important, but heavy topic, and, of course, about monetary policy, interest rates and the balance sheet. So, I am happy to have been given a different topic for the last speech – financial stability. Thorsten told me to speak either about what the entry into the euro area means for the financial stability of Croatia, or about the risks to financial stability. I shall try to combine both and tell you what I have learned about financial stability from Croatian experience over the last 30 years, and how I see things now that we got into the euro area and the banking union. Over the last three decades, the Croatian banking system went through a transformation from a group of mostly bankrupt socialist financial institutions into a set of strictly supervised, overwhelmingly private, internationalised companies with strong corporate governance.