The Council of the Croatian Financial Services Supervisory Agency (HANFA) discussed, among other things, the impact of the corona crisis on the financial services sector and the possible introduction of euro currency in Croatia with its effects on the financial markets.

According to the 3 macroeconomic scenarios, for a period of six months, even in the most conservative scenario, the size of the estimated losses of funds at the system level in 2020 is smaller than the size of the gains realized in the previous year. The balance sheets of insurance companies may withstand a new shock in the financial markets as the decrease in the value of liabilities due to the increase in the discount rate outweighs the possible market decline in the value of the companies' assets.

The Council also discussed the impact of the future introduction of the euro in Croatia on the economic balance sheet and solvency of insurance companies. He estimates that companies joining the eurozone will have a reduction in the amount of their own funds as well as solvency capital due to the necessary growth in the amount of technical provisions. That is why HANFA has prescribed a methodological approach to companies for the market exercise of assessing the introduction of the euro on the economic balance sheet and solvency position, based on which companies will conduct periodic simulations and report to the regulator in the coming period.

Source: hanfa.hr