The National Bank of Croatia was founded in 1992. It has the responsibility of issuing currency and regulating the commercial banking sector. The Croatian dinar was issued 23 December 1991, and was replaced in 1994 by the kuna.
Commercial banks in Croatia include: Dalmatinska Banka, Zadar (1957), Dubrovacka Banka, Dubrovnik (1990), Slavonska Banka, Samobor (1873), Istarska Banka, Pula, and Osijek (1990). As of February 1996 Croatia had 57 banks. In 1995, Raiffeisenbank Austria d.d. Zagreb began operating in Croatia as the first bank with 100% foreign capital.
Bad lending practices, whereby banks willingly lend to local companies regardless of creditworthiness, has plagued the Croatian banking sector. Many Croatian banks remained in crisis into 2000. Since independence, a total of 15 Croatian banks have gone bankrupt.
The Croatian Bank for Reconstruction and Development (HBOR) was established in 1992 as a 100% government-owned institution, with the tasks of financing reconstruction and development and promoting exports through credits and credit guarantees. The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $2.8 billion. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $12.7 billion. The money market rate, the rate at which financial institutions lend to one another in the short term, was 3.9%. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 5.9%.
The Zagreb Stock Exchange (ZSE) started operations in 1991. However, out of the entire portfolio of the Croatian Privatization Fund only 2% was privatized through the exchange. The introduction of the new Privatization Act in 1996 was expected to increase the role of the stock exchange, as was the adoption of an Investment Funds Act and a Securities Act. The Securities Law regulates the public offer of securities, legal entities who are authorized to conduct business with securities, securities transactions, prohibitions regarding businesses with securities, and the protection of investors. Market capitalization of the ZSE was $3.3 billion in 2001, and trading value was $117 million, with a turnover ration of just 4%.