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Europe > Croatia, Republic of

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Cover IMF Working Papers
ECB Euro Liquidity Lines
Silvia Albrizio, Iván Kataryniuk, Luis Molina, and Jan Schäfer
Central bank liquidity lines have gained momentum since the global financial crisis as a crosscurrency liquidity management tool. We provide a complete timeline of the ECB liquidity line announcements and study their signalling and spillback effects. The announcement of an ECB euro liquidity line decreases the premium paid by foreign agents to borrow euros in FX markets relative to currencies not covered by these facilities by 51 basis points. Consistent with a stylized model, bank equity prices increase by around 1.75% in euro area countries highly exposed via banking linkages to countries whose currencies are targeted by liquidity lines.
Keywords:
liquidity facilities; central bank swap and repo lines; spillbacks.; ECB liquidity line announcement; ECB Euro liquidity line; cross-currency liquidity management tool; central bank liquidity line; Liquidity; Currencies; Currency markets; Currency swaps; Asset prices; Global
Cover IMF Working Papers
European Housing Markets at a Turning Point – Risks, Household and Bank Vulnerabilities, and Policy Options
Ms. Laura Valderrama, Patrik Gorse, Ms. Marina Marinkov, and Petia Topalova
European housing markets are at a turning point as the cost-of-living crisis has eroded real incomes and the surge in interest rates has made borrowers more vulnerable to financial distress. This paper aims to (i) shed light on the risks in European housing markets, (ii) quantify household vulnerabilties, (iii) assess banking sector implications and (iv) examine policies’ effectiveness using simulations based on microdata from the Household Finance and Consumption Survey (HFCS) and EU statistics on income and living conditions (EU-SILC). Under the baseline IMF macroeconomic forecast, the share of households that could struggle to meet basic expenses could rise by 10 pps reaching a third of all households by end 2023. Under an adverse scenario, 45 percent of households could be financially stretched, representing over 40 percent of mortgage debt and 45 percent of consumer debt. The impact on the banking sector seems contained under the baseline forecast, though there are pockets of vulnerability. A 20 percent house price correction could deplete CET1 capital by 100-300 basis points. Fiscal measures, such as subsidies to the bottom income tercile, could save 7 percent of households from financial distress at an estimated cost of 0.8 percent of GDP.
Keywords:
Housing markets; overvaluation; affordability; household vulnerability; tenure status; income distribution; consumption; financial stability; targeted support; macroprudential policy.; EU banking sector; banking sector implication; housing market correction; house price correction; bank capital; Mortgages; Housing prices; Income; Housing; Europe; Eastern Europe
Cover IMF Staff Country Reports
Republic of Croatia: Representative Rate for the Euro
International Monetary Fund. Finance Dept.
The Council of the European Union decided on July 12, 2022 that the Republic of Croatia had fulfilled the necessary conditions for adoption of the euro with effect from January 1, 2023,1 and that the conversion rate should be set at 7.53450 Croatian kuna per one euro.2 The Croatian authorities notified the Fund on October 5, 2022, that the euro will be their country’s currency, effective from January 1, 2023.
Keywords:
representative exchange rate; capital markets department; copyright page; representative rate; exchange arrangement; Exchange rates; Capital markets