Role of the Central Bank of Bosnia & Herzegovina in the Process of BH Integration in the EU

A reliable, stable and independent central bank, by ensuring monetary stability, contributes to macroeconomic stability and better preparing of the entire country in the European integration process. According to the strategic plan of the Central Bank, with purpose of gradual convergence to the EU standards and the preparations for joining the European System of Central Banks (ESCB), the Central Bank applies a proactive approach, with the institutional development, directed towards the challenges and requirements of the EU pre-accession process.

The Central Bank of Bosnia and Herzegovina participates in all the stages of the European integration process of BH and contributes to the European integration process of BH according to its competences. The Central Bank prepares information, data and documents for the regular annual report of the European Commission on BH and the Economic Reform Programme and participates in the work of coordination and expert structures in BH which have been established with purpose of performing the contractual obligations arising from the Stabilization and Association Agreement obligations and other obligations of the European integration process.

The Central Bank of BH will also be expected to meet the Convergence Criteria or the Maastricht Criteria, defined by the Agreement from Maastricht in 1992. The Convergence Criteria are the criteria which need to be met by the EU member countries in order to enter the third stage of the Economic and Monetary Union and introduce euro and become a part of the Eurosystem, a single monetary area with the common currency:

  • Inflation rate of a certain country candidate for the EMU must not be higher by more than 1.5 percentage points than the average inflation rate in the three EU member countries with the lowest recorded inflation.
  • Budget deficit must not exceed 3% of GDP.
  • Public debt as a share in GDP must not exceed 60%.
  • Average nominal long-term interest rates must not exceed 2% compared to the interest rates of the three EU countries with the lowest inflation rates.
  • The stability of foreign exchange rate and the participation in ERM II (exchange rate mechanism): in the period of minimum two years before the euro introduction, the exchange rate of the currency in relation to euro must be floating within the permitted range of +/- 15 in relation to the central parity.

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