Decisions adopted by the Governing Board on the occasion of its 335th regular meeting on 6 July 2006

1. At its session of 5 July 2006, the Governing Board of the Bank of Slovenia left the bank’s key interest rates unchanged. The interest rate level is in line with the maintenance of price stability and the stability of the nominal euro/tolar exchange rate.
   Year-on-year growth in consumer prices fell to 2.9% in June, which points to inflation remaining within the projected boundaries. Further evidence for this came from the movement of core inflation, which fell further in June to 1.3%. The major price movements in June were significant falls in prices of refined petroleum products and certain seasonal products (food, clothing), and higher prices for seasonal services (package holidays, hotel and catering services). Although the 12-monthly average inflation rate rose to 2.6%, it remains below the reference value for the inflation criterion, which stood at 2.7% in May. With the exception of oil prices, the macroeconomic factors remain unchanged from the Bank of Slovenia’s most recent forecasts, and should the right economic policies be continued there is no medium-term threat to price stability.
   Economic trends in Slovenia remain favourable. On the labour market registered unemployment has been falling since February, while the workforce in employment is growing faster than the workforce. These figures are partly a reflection of the high economic growth in the first quarter, but to a great extent are also the result of stricter administrative rules regarding unemployment records, which is confirmed by the surveyed unemployment rate, which was unchanged from the same period last year. Wage growth in the first four months of the year was lower than the high growth in productivity, and in line with the projected medium-term level of productivity.
   
2. At today’s meeting the Governing Board of the Bank of Slovenia amended the regulation on the capital adequacy of banks and savings banks. The amendments to this regulation introduce the use of prudential filters in calculating the capital of banks and savings banks, which are being introduced because of the application of international financial reporting standards.
   
3. The Governing Board also adopted a regulation amending the regulations on the minimum level of liquidity to be maintained by banks. The change in the foreign currency minimum enters into force on the day after the announcement of the euro conversion rate for the tolar, while the (abolition of foreign currency credit and the simultaneous) reduction in the weighting of corporate and household sight deposits to 60% in the time bucke up to one month and to 45% in the time bucke up to 6 month will apply from 1 January 2007. 
   These changes will make it easier for banks to make substantive preparations for adopting the euro, and will allow them to restructure their balance sheets appropriately. The amendments follow the guidelines regarding the ongoing strategies for restructuring the liquidity ladder in 2006 that the Bank of Slovenia announced to banks in the timetable of changes in projected measures.
   On the day after the announcement of the conversion rate for the tolar (in the Official Journal of the European Union), a lower foreign currency minimum will begin to apply to banks, having been reduced by virtue of the amendment from the current 50% to 30% of the monthly average of total unweighted foreign currency balance-sheet liabilities with maturity up to 6 month; it will be abolished in full on 1 October 2006.
   
4. The Governing Board adopted a decision on the gradual discontinuation of Bank of Slovenia foreign currency bills. Subscription will remain possible until 28 August of this year for 120-day bills, 26 September for 90-day bills, and 23 November for 60-day bills.