Žugić: CBCG does not have such a strong influence on price stability, but it can influence the credit potential of banks

The Central Bank (CBCG) does not have such a strong influence on price stability, but it can influence the credit potential of banks, that is, the dynamics of credit activity in a certain period of time, and thus indirectly also on demand, announced Governor Radoje Žugić.

At the annual meeting of regional governors held in Croatia, he said that due to the absence of the issuing function, the Central Bank does not have such a strong influence on price stability.

"Nevertheless, through the policy of mandatory reserves and macroprudential measures, we can influence the credit potential of banks, i.e. the dynamics of credit activity in a certain period of time, and thus indirectly also the demand, i.e. prices", said Žugić during the discussion.

The CBCG announced that the main topic of this year's meeting is about the challenges currently faced by the creators of monetary policies in the region, in the context of the current macroeconomic situation and the global environment.

Žugić, together with the governors of the central banks of Croatia, Slovenia, Bosnia and Herzegovina and North Macedonia, participated in a round table held at the Faculty of Economics in Rijeka.

The leaders of the monetary authorities of the region had the opportunity to discuss with students, representatives of the academic community and Croatian businessmen the challenges of monetary policy in small open economies, especially in light of high inflation.

Introductory speeches were given by the Dean of the Faculty of Economics, Saša Drezgić, and the Chief Economist of the Croatian National Bank, Vedran Šošić.

In the following, the governors, based on the experiences of their countries, discussed monetary policy in conditions of rising inflation, as well as the room for maneuver that central banks of small open economies have in the event of global inflationary shocks.

The discussion also referred to the impact of the monetary policy of the European Central Bank (ECB) and the transfer of rising interest rates to the interest rates of countries outside the euro area.

The annual meeting of regional central bank governors, which brings together governors, representatives of banks and the financial sector, aims to improve cooperation, exchange experiences and discuss current challenges related to key areas of financial stability.