Slovenia - Money

The Bank of Slovenia (BS, the central bank) is the bank that issues money and handles government funds. In October 1991, it released its own currency, the tolar, to replace the former Yugoslav dinar. Despite its consistently tight monetary policy , banks in Slovenia are relatively strong because of a decrease in consumer lending and also because many banks have received strong foreign currency inflows. This has been a reason for the growth in

Exchange rates: Slovenia
tolars (SIT) per US$1
Jan 2001 225.93
2000 222.66
1999 181.77
1998 166.13
1997 159.69
1996 135.36
SOURCE: CIA World Factbook 2001 [ONLINE].

corporate lending. The tightening of monetary policy has a significant impact on keeping interest rates low.

Slovenia's stability and high per-capita GDP make its stock market an attractive ground for foreign institutional investors. Brokerages hold that Slovene voucher-privatization funds offer one of the most attractive investment opportunities in the region. But tight restrictions on foreign capital have sent many investors looking elsewhere, and even the recent relaxation of the rules is not certain to bring them back. Foreign investors in Slovenia must choose between 2 types of investment accounts. The first one allows the player to participate in local trading and transact with local entities, but requires a fee that is in fact a foreign currency forward. The second type is fee-free, but there is a holding period of 7 years during which any such shares could be traded among foreign investors, but not sold to the local market. This scheme was aimed at creating a parallel foreign market, but trading volumes at first failed to generate the amount of cash needed. As restrictions took effect, money inflows decreased dramatically, and the main index of the Ljubljana Stock Exchange fell by 20 percent. But soon after the scheme was put to this test, it started working as intended. Slovenia welcomed this as a victory over the changeable nature of international capital flows. However, it is expected that the restrictions could become an obstacle in Slovenia's negotiations to join the EU.

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