7. Monetary Policy in Croatia During Two Recessions

The paper compares the monetary policy in Croatia during two crises: the great recession and the COVID pandemic. The great recession was a global financial shock that strongly affected Croatia. During the great recession, the central bank was focused on exchange rate stability with little regard for the economy and the effect of the restrictive monetary policy on the real economy. The COVID pandemic was global, but the effects of the crisis are particular, depending on the structure of the economy and measures taken to suppress the pandemic. During the COVID crisis, CNB introduced a new monetary transaction and was able to preserve both liquidity in the economy and exchange rate stability. The paper also proposes further policies to strengthen the quality and inclusiveness of monetary policy in Croatia.