Creation of the Croatian National Currency

Creation of the Croatian National Currency


Let us be a little, well, immodest,
but it really is beautiful! I tried to make the animals appear alive. To be quite honest,
it was one of the most important days in my career at the time,
perhaps even my entire career. There were tears,
there were such touching moments, that I get goose bumps even
now when I think about it. Young men, 20 years old,
were lining up to go to war, and there we were, introducing
the kuna, a hard currency. People laughed at us… After all, this was a unique moment
in the life of an average man, the creation of something
which would define the state, the chance to participate in this. It was a great
pleasure and a great honour for us all. Dr. sc. Hrvoje Klasić, historian
It was the beginning of Croatia’s final
phase of disassociation, Dr. sc. Hrvoje Klasić, historian
its independence and
dissolution from Yugoslavia. Unfortunately, the process was
neither smooth nor painless, in the political sense, both internally and in
regards to foreign policy, but it was also painful from a
military aspect. Dr. sc. Franjo Gregurić
Prime Minister of the Republic of Croatia
from 1991 to 1992
On the one hand, it was the start
of the former Yugo-army’s Dr. sc. Franjo Gregurić
Prime Minister of the Republic of Croatia
from 1991 to 1992
departure from the territory of the
Republic of Croatia, which we had demanded, Dr. sc. Franjo Gregurić
Prime Minister of the Republic of Croatia
from 1991 to 1992
while on the other,
there was revolt among some of the Serbian population
in Croatia. In this atmosphere, it was
necessary to secure a normal life, manufacture, jobs, financing. Mr. sc. Zdravko Rogić
Deputy Governor of the NBC
(later renamed HNB) from 1990 to 2000
On June 27, Governor Ante Čičin-Šain
and I arrived and familiarized Mr. sc. Zdravko Rogić
Deputy Governor of the NBC
(later renamed HNB) from 1990 to 2000
ourselves with the materials,
documents presented to us. Mr. sc. Zdravko Rogić
Deputy Governor of the NBC
(later renamed HNB) from 1990 to 2000
We realized they amounted to
a collection of punitive measures wholly unconnected to the actions
of the national bank and banks in Croatia within the bounds
of monetary policy and system. They had all the practical
characteristics of punishment, sanctions for the decision in favour
of sovereignty and independence. Mr. sc. Borislav Škegro
National Bank of Croatia (NBC) Council member
from 1992 to 1997
Well, one of the methods by which
they thought they would achieve Mr. sc. Borislav Škegro
National Bank of Croatia (NBC) Council member
from 1992 to 1997
something significant was a sort of
expulsion from the monetary system, thus the denial of loans from the primary
issue and some other benefits the economies could have
gained in that moment. Military aggression on Slovenia
began on the 27th, but in a way, the decisions, and there were
several made that day, represented a form of financial aggression
against Slovenia and Croatia. In addition to the recommendation
from the federal government to the national bank and its Board of Governors, on July 10 a letter was sent by
Stane Brovet, general Kadijević’s deputy. In this letter – and I believe this
was very significant – he requested for the federal
government’s recommendation not to be implemented. Ultimately, this was a case of a departmental
mutiny against the federal government, and clearly, the Board of Governors
listened to the Yugoslav National Army (JNA). This made it obvious who was in charge
in Yugoslavia, even at this early stage. Croatia at that moment was not
internationally recognised, independent country, it was in
an interregnum, so to speak. De facto, it was no longer a part of Yugoslavia
while legally remaining so, while on the other hand it was
still not a sovereign state. Her Its institutions were prevented
from performing those functions that are simply not available to a
country which officially does not exist yet. INTRODUCTION OF THE CROATIAN DINAR Prof. dr. Marijan Hanžeković
chairman of the Commission
As you can see, the Commission
consists of members of Parliament Prof. dr. Marijan Hanžeković
chairman of the Commission
and members of the
Government – politicians and ministers, as well as members
of the professional services. It is very uniformly composed
which has reflected well in our work – our first meeting was on August 27,
and we have met 15 times since then. We have put in our best effort and
I hope we have successfully completed the task. Zlatko Jakuš
graphic artist and engraver
author of the Croatian dinar
Thus emerged a currency which
did not even have a name, Zlatko Jakuš
graphic artist and engraver
author of the Croatian dinar
but it was money which had to be
issued with the recognition of Croatia. From the conceptual design
and agreement on the name, appearance, colour scheme and dimensions,
to printing the first banknotes, it took three months
– an absolute world record. The money was printed in Sweden,
as you know, and the Swedes introduced a special third shift to work in order to
deliver the Croatian dinar on time. They are of very good quality
and safe from counterfeiting; Dr. sc. Ante Čičin-Šain
first Governor of the NBC
They are of very good quality
and safe from counterfeiting; Dr. sc. Ante Čičin-Šain
first Governor of the NBC
they have nine different
elements of protection. The banknote is of such quality there is
practically no fear of counterfeiting. Nikola Raguž
Currency Department director at the
NBC from 1991 to 1994
The first contingent of banknotes arrived
from Sweden by plane. Nikola Raguž
Currency Department director at the
NBC from 1991 to 1994
It was intended to land in Zagreb but
due to the EU-wide embargo on Croatia, the plane landed in Graz, Austria. It was then transferred to trucks and driven
to the central bank vaults in Zagreb. Mr. sc. Borislav Škegro
NBC Council member from 1992 to 1997
Formally, legally, it was not currency,
there were political reasons for this. Mr. sc. Borislav Škegro
NBC Council member from 1992 to 1997
The Croatian state leadership at that
moment did not want to give rise either either to the other member-states
of the former federation or to the international community. Mr. sc. Bogomil Cota
director-general of the Croatian branch
of the Social Accounting Service
and Commission member
We agreed to substitute the Yugoslav dinar
with the Croatian dinar over a period of five days, between
December 27 and December 31. Just before this there were further discussions
in the Government and wider afield, and it was decided to begin the replacement
before Christmas and the New Year so the numerous Croatian workers
living in Germany and other countries could exchange their currency for the
Croatian dinar when they visited. This was the main reason. The process of substituting the currency
is flowing very well, very calmly. Exchanges are happening in all parts of Croatia,
with almost no impediment, delays. This is equally the case in both
Eastern Slavonia and Dubrovnik, I do not even have to
mention the other regions. The plan was for the central bank
to distribute the Croatian dinar in cooperation with
the Social Accounting Service. Unfortunately, we were denied
access to our occupied areas but there were many other territories
directly imperilled by the war. Nikola Raguž
Currency Department director
at the NBC from 1991 to 1994
Dalmatia was also cut off. Nikola Raguž
Currency Department director
at the NBC from 1991 to 1994
Of course, we drove the money anyway,
by truck over the island of Pag to Zadar, Šibenik and Split and ferried it by sea
from Rijeka to Split and Dubrovnik. When currency is substituted in this way,
the obvious issue was that certain Dr. sc. Jozo Martinović
Finance Minister from 1991 to 1992
restrictions had to be enforced
to ensure illegal and problem dinars, Dr. sc. Jozo Martinović
Finance Minister from 1991 to 1992
problematic banknotes would not
appear and be mistaken for real money. With this in mind, the Commission evaluated
that it would be enough for every Croatian citizen to exchange
10000 Yugoslav dinars for an equal amount, 10000 Croatian dinars. Franjo Gregurić
Prime Minister of the Republic of Croatia
from 1991 to 1992
It was the first of all the activities
which led up to the forging of an independent and sovereign Croatian state, and can be characterised on the
one hand as part of a great effort of goodwill towards the international community, something done to prove ourselves
and create stable conditions in an effort to gain international recognition. Dalibor Brozović
Member of the Croatian Academy
of Sciences and Arts, Commission member
The long-term solution,
to be implemented when the monetary is the crown, divided
into a hundred banica. Dr. sc. Nedjeljko Mihanović
Commission member and president
of the Parliament Committee for Education,
Science, Culture and Sport from 1990 to 1994
The marten, at least its pelt, was in fact
a form of currency as early as the 13th century. People bartered
pelts for other goods… Dr. sc. Franjo Tuđman
first Croatian President
The marten was a means of payment
in ages long gone in the Croatian territories, from Slavonia to Istria. The kuna’s pelt was accepted as a means
of payment in other parts of the world, too, but I do not know of any other
country that gave the pelt as much significance as it has throughout Croatian history
and the Croatian national consciousness. Namely, the kuna is depicted on the historic
coat of arms of the ancient Croatian kingdom of Slavonia. Nikica Valentić
Prime Minister of the Republic of Croatia
from 1993 to 1995
We were under a lot of pressure because the kuna
bears the burden of the fact that it was also the currency during the time of the so-called
“Independent State of Croatia” (NDH). This was a completely insignificant
period in the Croatian history. That entity was not a true state,
legally or in any other sense. The fact that for a couple
of years someone used something that had lasted for centuries before,
is not a valid reason for it to be discredited. TENDER FOR COINS First, I should point out that
Member of the Croatian Academy of Sciences and Arts,
professor Brozović was the most responsible for the
issuing of the Croatian currency, especially minted coins. Nikola Raguž
Currency Department director at the
NBC from 1991 to 1994
He dealt with the history of
numismatics in his works, Nikola Raguž
Currency Department director at the
NBC from 1991 to 1994
was a keen numismatist himself,
so he had the best overview. We worked together a great deal,
but my part was more technical in nature. Calculations had to be done:
there were nine coins, it was necessary to calculate
their dimensions: diameter, size, thickness, weight. Kuzma Kovačić sent in the best
complete visual design, first a set of beautiful drawings,
then plaster models. Prof. Igor Zidić, Commission member
He was young at the time,
but already a great sculptor in the finest Croatian tradition. It was evident that his sculpting
skills were special, extraordinary, and it
was fully expressed here. Unburdened by history and tradition,
he allowed himself to be playful in his fine modelling and there was
absolutely no dispute within the Commission concerning his selection. In looking for a new visual design,
the art concept, Prof. dr. Kuzma Kovačić
sculptor, author of the kuna and lipa coins
in a way I really relied on the beauty of the old,
primarily antique coinage, money that has always been beautifully sculpted, not simply numismatically interesting and beautiful. That joy, the birth of a sovereign state,
gaining national, renewed freedom, it was an inspiration and a motive. I approached it this way and
I think in the end I succeeded with a beautiful resolution. TENDER FOR BANKNOTES Prof. Igor Zidić, Commission member
I suggested that at least one piece of currency,
one banknote should contain Prof. Igor Zidić, Commission member
the portrait of a prominent Croatian woman. I felt it was bad there were no women, and I remember Brozović told me women
would be included in the second series. He said it was too late to
go back to the drawing board; we would lose too much time. I said there are several women
we must not forget, and mentioned Ivana Brlić Mažuranić. Dr. sc. Nedjeljko Mihanović
Commission member and president
of the Parliament Committee for Education,
Science, Culture and Sport from 1990 to 1994
The Commission’s idea was to use
the designs of the currency, Dr. sc. Nedjeljko Mihanović
Commission member and president
of the Parliament Committee for Education,
Science, Culture and Sport from 1990 to 1994
which had already been planned
in denominations of 10, 20, 100, 200, 500 and 1000 kuna,
to cover the entire territory of Croatia. There was a lot of controversy. I wondered how it is that we
could not decide on Zadar, but there it is, it was not
selected for the simple reason that we could choose only eight,
and Croatia really has more than eight important historical cities. Certainly nobody would have had anything
against Šibenik and its cathedral, perhaps the single most important piece
of the Croatian art – as the work of our hands,
our minds, in our city. At that time of war, we believed that
money is not only an aesthetic object, but something that sends a message,
something to identify with. SELECTED DESIGN FOR BANKNOTES Prof. Igor Zidić, Commission member
Within the Commission,
we created an external, expert committee who were responsible
for the recommendations; a professional choice, to be verified
or corrected by the Commission depending on the final decision. Some of them did not even have enough time, the deadlines were very tight,
it was burdensome. The submissions were short,
we were in a terrible hurry. SELECTED DESIGN FOR BANKNOTES Two of the most complete works were
by Šutej and Ljubičić, the difference being that from the beginning,
Šutej’s work was somehow better defined, from head to toe as it were.
All the banknotes, obverse, reverse. Everything was included in his project,
while Ljubičić was really giving only samples; the obverse of one banknote, the reverse of another. I think he had three or four banknotes
while Šutej had all eight, which probably greatly influenced
the members of the Commission. Prof. dr. Vilko Žiljak
co-author of the kuna banknotes
Mr Šutej, my friend and colleague,
is primarily an artist, Prof. dr. Vilko Žiljak
co-author of the kuna banknotes
so the deliberacy of the arrangement and
the choice of visual elements were led by him. It was a wonderful connection
between two men who fully understood the intricacies. We did a professional job, the same as
for any banknote in the world. PRODUCTION We minted the coins in
a very short period of time. Dr. sc. Đuro Črnjak
first director of
the Croatian Monetary Institute (HNZ)
In eight months we completed everything,
from the initial decisions to establish the HNZ to the realisation
of the first minting. The Commercial Services Agency and
the National Bank were in this project together. We had the tools made at the Stuttgart mint; member of the Croatian Academy of Sciences
and Arts Brozović, Kuzma Kovačić and I visited them several times and corrected some things
with which the author was not satisfied. One anecdote I would like to
mention was the 5 kuna coin, which depicts a bear on the reverse. Kuzma had designed a wonderful
sculpturally rich solution and insisted on the bear being beautiful and sturdy
as in the design chosen by the HNB Commission. We had a bit of trouble there, since we again had
to cut costs so we ordered relatively thin plates from the Royal Mint and there
was not enough space. Regardless of the deadline pressures and
everything else, after a few iterations, we managed to find a solution
which pleased the author while remaining feasible due to
the thinness of the minting plate. Prof. dr. Vilko Žiljak
co-author of the kuna banknotes
Vector graphics were ideal at that
time and we raised it to a new, immense level. Prof. dr. Vilko Žiljak
co-author of the kuna banknotes
I can now say it was a miracle that it succeeded. However, we had to use a high resolution photo unit,
huge for the time, then we had extraordinary programs. We created a beautiful little group of people
who were absolutely devoted to this task, which had no set working hours. Wages had also been adjusted to wages in general.
It was nothing excessive. Boris Raguž
Currency Department director, HNB
We investigated and found that indeed
Croats working there fraudulently used our 10 kuna as payment
instead of the 10 DM note. It became so widespread that the Bundesbank
asked us to consider the possibility of replacing this banknote with a new series,
which would be visibly different – especially in colouring – from the 10 DM they
had put into circulation two years previously. STABILISATION PROGRAMME First of all, we were at war. Nikica Valentić
Prime Minister of the Republic of Croatia
from 1993 to 1995
Metaphorically speaking, the entire southern
part of Croatia and Bosnia and part of Herzegovina – which is economically dependent on Croatia – were relying on the strength of
two damaged pillars on Pag bridge. Two-thirds of Croatia was
under threat of potential war while the last third was already occupied. It was a dilemma: either have a wartime economy, meaning scattered distribution
and wartime production, or an embryo market economy,
which we opted for. Mr. sc. Borislav Škegro
NBC Council member from 1992 to 1997
Prior to launching the stabilisation programme,
President Tudjman tasked us in a way with the
success of this programme – stabilize the currency before
the introduction of the kuna. We certainly would not have
introduced the kuna if the stabilisation programme had failed. Inflation was at 36 percent
in the final month. By some estimates, in three to six months
it would have risen to 1,000 percent. This is the so-called Argentine syndrome,
which others are more competent to discuss. It was a dilemma:
we could have total anarchy or order. The first step was the elimination of inflation,
that most unjust of taxes. Secondly, restructuring.
We created a serious restructuring department. Later on the rehabilitation
of the banks and measures which had been in the planning
stages for ten years. The first part of the programme was
implemented very efficiently. The Croatian currency dinar was stabilised,
and finally the crowning moment of the introduction of the Croatian kuna. To be quite honest, it is one of the most
important days in my career at the time, perhaps even my entire career. Absolutely positive effects – everyone who
has participated in it can feel proud, especially the economic team
as the authors of the programme, led by Vice-President Škegro
and Governor Jurković. INTRODUCTION OF THE KUNA The introduction of the kuna in 1994
– and it happening on our Independence Day – was in some ways, Dr. sc. Hrvoje Klasić, historian
proof of the power held by
the Croatian authorities at that point, proof they were in control of
the situation to a much greater extent than it had in mid- and even late 1991. Dr. sc. Pero Jurković,
Governor of the NBC
from 1992 to 1996
That we have reached this great day
is due to the results of a diligent, Dr. sc. Pero Jurković,
Governor of the NBC
from 1992 to 1996
wise and principled overall and
economic policy in Croatia. This act is also evidence of
the solid and clear commitment of our country and its leadership to peaceful
politics and a policy of economic revival based on versatile Croatian
involvement in contemporary European and world economics. However, the greatest contribution to
this celebration has been by the ordinary people and citizens of Croatia,
who have patiently borne the brunt of the war and the stabilisation programme,
and who are still willing to give their all for the freedom, development
and prosperity of this country, our dear and only Croatia. Special thanks go to you, Mr. President,
who has been there every step of the way, to provide us
with the advice and support needed to persevere in this work. With God’s help, may our kuna and lipa
have luck and sail calm waters on their way to joining a society of stable
and globally recognized currencies. The kuna was a very important element
in the defense of the country – moral, material and psychological. Dr. sc. Franjo Tuđman
first Croatian President
At all times and in all countries,
the introduction of a national currency Dr. sc. Franjo Tuđman
first Croatian President
has had great significance in a moral,
political and psychological sense and consequently, the economic. I am convinced that the same will hold
true for the introduction of our own currency, the kuna and lipa. The Croatian people deserve this – in fact,
the Croatian people have contributed both politically and economically,
and unfortunately in war, defending their homeland, defending
against aggression – because today, the Croatian people hold their own
currency in their hands as a means to further their development. BANKNOTE LIFECYCLE Boris Raguž
Currency Department director, HNB
The life span of banknotes
issued in smaller denominations is somewhere up to 24 months, two years. For larger denominations the lifespan is longer,
3, 5 to 4 years. Otherwise, the most used denomination,
with the greatest number of banknotes in circulation in Croatia, is HRK 200. This is primarily because banks use it for
payouts and for ATM withdrawals. When talking about quantities,
the 200 and 100 kuna banknotes make up almost 50% of the current circulation. Prof. dr. Vilko Žiljak
co-author of the kuna banknotes
The crown banknotes,
which evolved into the kuna, Prof. dr. Vilko Žiljak
co-author of the kuna banknotes
were created using vector graphics,
which means their lines are very fine. At the time, these fine lines were effective
against the very strong threat of photocopying. They were difficult to photocopy, almost impossible,
at least at that time, and the tradition of fine, super-thin
lines was continued to the extent of using them for the lettering
– we are talking about microtext here, which is a character less than
one millimetre in height. The design has remained the same,
but we have added some new protective elements. Prof. Miroslav Šutej
designer and co-author
of the kuna banknote
There were few interventions,
we added new elements for protection and they they have given a new image
to the banknote. The upgrade of the existing series
of banknotes has proved to be very successful because during
these twenty years of using, kuna banknotes have a practical average
of around 1,000 counterfeits detected annually. To illustrate, if we start with the current
circulation figure of 160 million banknotes, that is two counterfeits to every
million registered banknotes, an almost negligible number. FUTURE The future of the Croatian kuna is to
remain a stable currency Dr. sc. Boris Vujčić, HNB Governor
that will serve the basic goal of the HNB,
which is price stability, Dr. sc. Boris Vujčić, HNB Governor
which means- we have stable prices and
a stable currency, although it is not fixed. There is no fixed exchange rate,
we let it fluctuate against the euro, but we cannot allow excessive exchange rate oscillations,
a policy the HNB will maintain in the future. One of the main goals of our monetary
policy is to maintain the kuna at a stable exchange rate until
the introduction of the euro. Why? Because Croatia is a very highly
euroised country, citizens’ loans as well as those of businesses and even
the state are tied to the euro exchange rate; any significant fluctuations, such as a falling
kuna exchange rate to the euro, would in fact lead to an increase in debt. Excessive strengthening of the euro would not
have a good effect on Croatia’s competitiveness, therefore the obvious choice
is to maintain a stable exchange rate until the introduction of the euro. Mr. sc. Borislav Škegro
NBC Council member from 1992 to 1997
And if you look at the twenty-year history
of the fluctuation of the free floating exchange rate, Mr. sc. Borislav Škegro
NBC Council member from 1992 to 1997
you will see that the kuna is one of the few currencies
that has maintained the highest degree of stability, formerly in relation the German mark
and to the euro today. Prof. dr. Kuzma Kovačić
sculptor, author of the kuna and lipa coins
I am a little sad at the idea, if the Croatian
currency is someday replaced by the euro. If it proves necessary,
it would be nice for the Croatian euro to retain some part of this visual design
for the kuna and lipa. Well, for the euro to be introduced at the moment,
from the perspective of where we are today, the most important task will be to bring
public debt under control. We know that public debt has grown
rapidly since the beginning of the crisis, we know that in order to enter the eurozone
the state must meet the so-called Maastricht criteria relating to the budget deficit and public debt,
the inflation rate, the exchange rate, which must be stable, and interest rates. At the moment, our biggest problem is
the rapid growth of public debt. We can begin to talk about joining the eurozone
only when we push the growth trajectory of public debt in GDP downwards. Only then will we be ready to start a discussion
and meet the other Maastricht criteria.

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