1. PEMPAL - TCOP WG thematic workshop – Moscow – 5 April 2017
Republic of Croatia - Ministry of Finance
The Relationship between the Treasury Cash Management Function and the Central Bank Functions
PEMPAL - TCOP WG thematic workshop – Moscow – 5 April 2017

2. The Croatian National Bank Act
Regulates correlations:
The Croatian National Bank is exclusively owned by the Republic of Croatia
The Republic of Croatia is the guarantor for all liabilities of the CNB
The CNB is independent and the Republic of Croatia cannot influence its decision-making or execution process, especially:
Monetary and FX policy – price and FX rate stability – where necessary, the CNB performs fine tuning operations in the open market – repo and reverse repo operations
The government cannot borrow funds from the Central Bank – but the Central Bank can buy government securities on the secondary market.

3. The Budget and Budget Execution Act
Public Debt Management Service
Contacts and consults market investors, assesses the financial market situation, conducts risk assessment
Negotiates long-term liabilities - credits and bond issuance; and short-term liabilities - credits and treasury bills
Transparent publication: annual reports and the public debt management strategy , the borrowing and T-bill auction calendar
Liquidity Management Service
Prepares quarterly and annual liquidity plans which are updated on a daily basis
Placement of occasional free cash flow surpluses by using short-term deposits on the money market in commercial banks (with collateral), and government securities (through the Croatian National Bank, for FX placements). Basic principles of investment: security, liquidity and cost-effectiveness
Committee for Liquidity - considers monthly liquidity plans

4. FISCAL, MONETARY AND PUBLIC DEBT POLICY
officially - the CNB Act from 2008, 2013; unofficially - where needed, at the highest level
MINISTRY OF FINANCE
THE CROATIAN NATIONAL BANK
borrowing plans
bank system liquidity; interest rates
PAYMENT OPERATIONS
Execution of payment operations - officially - contracts; unofficially - intensive daily contact
Development of payment operations - Technical working group - National Committee for Payment Operations, Cooperation Agreement
Defined deadlines, conditions, technical requirements for execution methods and fees
defining and proposing common measures in payment operations, proposing new services pursuant to international standards, e.g. the national SEPA project

5. MANAGING THE FINANCIAL CRISIS ANALYSES AND PROJECTIONS
STATISTICS
officially - Cooperation Agreement
MINISTRY OF FINANCE
THE CROATIAN NATIONAL BANK
government finance statistics for the IMF
the public debt report, government finance statistics for the ECB
MANAGING THE FINANCIAL CRISIS
officially - memorandum of understanding
highlighting system risks which threaten financial stability
ANALYSES AND PROJECTIONS
unofficially
regular publishing of macroeconomic projections and analyses, cooperation of experts from both institutions

6. REPUBLIC OF CROATIA FUNDS AT THE TSA IN THE CNB
IBAN: HR
HRK
- CNB manages accounts for the RC but is not in charge of the payment operations for these accounts (electronically through FINA)
- CNB pays interest on the deposited funds
- CNB charges fees for providing services and performing operations to the depositor (and to FINA, as well)
€/$/£
- CNB performs payment operations electronically
- CNB does not pay interest on foreign deposits, nor does it charge fees for performing payment operations
- Since June 2014, interest rates on EUR deposits, as well as for all short term deposits and investments, have been negative (following the ECB decision)
- operations via the TSA
- CNB does not use cash and certain foreign currencies
- account balance accessible in real time, electronically
- still no account balance targeting

7. POSSIBLE PROGRESS IN COOPERATION
Cooperation adequate, but can it be better?
Increased cooperation (speed) at the operational level
Lack of readiness to conduct certain transactions
Engaged investment (f/x) consultant, FX rate developments
The role of the fiscal agent in reducing public debt management expenses
Liquidity fine tuning
A common IT system
A more pro-active approach

8. THANK YOU FOR YOUR ATTENTION!