Croatian banks ask for no funds at today’s weekly repo auction

The HNB did not allocate any funds in the regular weekly repo auction today, which is the twenty-first straight week in which there was no demand. Local sources have previously said that this is on account of too high costs but we also note that liquidity of late has been abundant even though lending has been steadily growing on transaction-based terms. The weekly repo auctions were launched in September 2015 with the objective to inject short-term liquidity in the system, following the requirements of the adopted CHF-loan conversion legislation. The interest of banks was high in the first months but then it slowly faded out and in the past year banks have been asking for funds only in the summer months when demand for local currency increases during the peak of the tourist season.

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