Banks did not demand any funds at the regular weekly repo auction of the HNB today, latest data reveal. We remind that bids are only modest at HRK15m in the previous two weeks, the lowest demanded amount ever since the instrument was launched in September 2015. We remind that there were no bids in the entire October and the first week of November too following meagre demand in the summer months at the high of the tourist season when liquidity in the system fell due to strong demand for local currency. There were no bids in almost all auctions since early March until early July as well.
The weekly repo auction aims to inject short-term liquidity, and was launched more than two years ago to address the requirements of the CHF-loan conversion legislation. Local banks were more active in using the instrument in the first months but their interest gradually subsided throughout 2016 and was barely existent in 2017, confirming that banks dispose of sufficient liquidity to support domestic lending.