‘HNB is an ordinary exchange office that does not grant loans to banks’

We need to significantly re-sovereignize the monetary system, we must utilize the great potential of domestic savings, change the main goals of monetary policy, and involve HNB in the recovery process.

This was stated by Ivan Lovrinović from the Faculty of Economics in Zagreb at the annual economists’ consultation in Opatija. Lovrinović added that HNB should be included in the recovery process and that the issuance of money should be much more tied to the domestic economy. Interest rates need to be reduced, the currency clause should be abolished, we need to strongly turn to other markets in the world, and for all this, knowledge, courage, and faster changes of bad governance are needed, he said. Lovrinović noted that the monetary systems of the Eurozone and Croatia are incompatible.

He stated that HNB creates primary money exclusively based on foreign currencies it has or that are offered to it for purchase or sale and that our monetary system does not take into account the real economy.
– We are pretending to have monetary sovereignty, we are a deeply dependent country in terms of monetary policy – he said, assessing that ‘HNB is actually an ordinary exchange office that does not grant loans to banks’ and that it is ‘turning into a statistical office without an active approach’.

He believes that ‘the system functions on self-reliance’ and that ‘nothing would happen if Croatia had no government, i.e., sometimes it is better to do nothing than to do something bad’. He pointed out that loans to companies are declining, that monetary policy is leading to recession even faster, and that ‘the kuna is money completely neglected by the state’.

He asked why the state does not borrow from HNB, but rather borrows more expensively from banks, stating that, just by calculating interest rate differences, taxes should not need to be changed. He emphasized that companies are groaning under the burden of the divergence between the real and monetary economy, that interest rates are high, that the unrealistic exchange rate has not reacted to anything for years, and that savings in banks are enormous.

He reminded that he had already warned that there would be a capital flight from Croatia. He believes that this will happen before the collapse of the exchange rate and asked why the program to prevent capital flight, developed by former HNB governor Željko Rohatinski, is not activated.

The president of the Croatian Chamber of Commerce, Nadan Vidošević, spoke about the visit of the Croatian state delegation to Qatar, saying that it was ‘promising, on the trail of something from 10 years ago’. He said that a new moment is that ‘signals have come to both Croatia and Qatar to return to the positions from 2002 when Qatar included Croatia among its top five points for expansion, including natural gas’.

Vidošević, speaking about managing our own space and resources, said that we need to determine where we are going and that, if we agree, ‘someone will have to tell the people that the purpose of reforms and the government’s attempts is not to live better, but not to live worse’, because ‘Croats live very well, but the problem is uncertainty’. He asserted that the general standard has never been better, but the question is whether we will be able to maintain the existing standard.

Vidošević repeatedly referred to the issue of social elites in his presentation, stating that we easily renounce our own social elite, that this has been the case in history, that our society, with the existing biological and intellectual capital, cannot withstand such changes, and that this creates problems in governance and management.