Press release after the Meeting of the Governing Board of the Bank of Slovenia on 9 September 2014

Supervisory matters, local government, payment systems

Ljubljana, 9 September 2014

1.
The Governing Board of the Bank of Slovenia discussed current supervisory matters.
2.
The Governing Board of the Bank of Slovenia was briefed on public finance developments in the local government sector in Slovenia, with an emphasis on the indebtedness of the municipalities, which supplemented the material discussed at the meeting of the Governing Board on 29 July 2014. From a macroeconomic point of view, the size of the debt of the municipalities, i.e. the local government sector in Slovenia, is not problematic, as the debt is relatively low, and the municipalities are generally settling their liabilities regularly. Local government debt amounted to 2.1% of GDP at the end of 2013, or just under 3% of total government debt. The municipalities undertake short-term borrowing for liquidity reasons, and long-term borrowing for investment purposes. Municipal borrowing is restricted by law. The restrictions relate to the maximum allowed quota of annual repayments of debt principal together with interest (and not to the amount of debt), and to the approvals issued for municipal borrowing by the Ministry of Finance. The municipalities are estimated to have used approximately half of their allowed quota of annual debt and interest repayments on the basis of the figures for 2013.

3. 
The Governing Board of the Bank of Slovenia was briefed on the report on payment systems operations for the second quarter of 2014. The report discusses the developments in the volume of payment transactions cleared and settled in payment systems operating under Slovenian law, and any deviations or disruptions in the operation of these systems. The Governing Board of the Bank of Slovenia finds that all the systems are operating stably and without any major disruptions that could have an adverse impact on the smooth and timely non-cash transfer of money between economic entities. Over 55 million transactions with a total value of EUR 152 billion were cleared and settled in the aforementioned payment systems in the second quarter of 2014. In terms of transaction value, the most important is the TARGET2-Slovenija system operated by the Bank of Slovenia, which accounted for 89.73% of total transaction value. This system is primarily designed for the settlement of large-value payments, and was not originally designed for the settlement of payments among customers of banks and savings banks (the average transaction value in the aforementioned quarter was thus EUR 1.03 million). In terms of the number of transactions, payment systems that clear and settle retail payments, such as transactions from the use of payment cards and SEPA credit transfers and direct debits, are more important.