This Financial Sector Assessment (FSA)summarizes the structural and developmental aspects of the2007 Financial Sector Assessment Program (FSAP) updatereport for the Republic of Croatia. An in-depth elaborationon the stability and prudential oversight aspects of theFSAP Update, including factual updates of core principlesand Report on the Observance of Standards and Codes (ROSCs),are summarized in the Financial System Stability Assessment(FSSA) that was discussed by the International Monetary Fund(IMF) Board as part of the Article IV consultation, in May2008. This FSA should be read together with the Fund'sFSSA in order to obtain a full sense of the findings andrecommendations of the 2007 Croatia FSAP Update. The mainconclusion of the FSAP update is that, although substantialimprovements in regulation, supervision and institutionalcapacity are observed, challenges remain given the rapidlygrowing credit and securities market sectors.