THE ISSUE OF MONEY AND THE BALANCE SHEET OF THE CENTRAL BANK

The issue of money is the one characteristic that provides to the central bank its supremacy in a financial system. According to it, the central bank directly influences national monetary policy and indirectly it influences the interest rate, the inflation and price stability, all crucial factors of a stable national economy. The paper presents the theoretical and empiriical side of the topic, with a view of the example of the Croatian National Bank. It explains the financial and credit potential linked with the banking system. In conclusion it briefly analyses the balance sheet of a central bank, all to the scope of indicating the benefits and shortcomings of losing monetary sovereignty when joining the European monetary union under the instrumental guide of the European Centaral Bank.