24 years of the Central Bank of Bosnia and Herzegovina

Today, 24 years ago, the Central Bank of Bosnia and Herzegovina (CBBH) has commenced its operations. According to the Constitution of Bosnia and Herzegovina, this institution is the only one responsible for issuing currency and for monetary policy in entire BH. According to the CBBH Law, the aim of the Central Bank is to achieve and maintain the stability of the local currency, convertible mark, by issuing the local currency according to the arrangement known as currency board.

Since its establishment to date, the CBBH has successfully overcome numerous challenges, from the introduction of the single BH currency, payment system reform, banking sector reform, replacement of DEM with EUR and its relation with KM by fixed exchange rate, the financial crisis in 2008/2009, implementation of projects with the European Central Bank (ECB) and central banks of the Eurosystem, to the introduction of European standards of central banking in the operations of this institution. A particular challenge has been operating during the COVID-19 pandemic.

Yet, commitment to work and development, pursuing excellence in work always bring good results and praises are received on every day basis. The most recent one arrived from Brussels by the European Commission (EC) and the European Central Bank (ECB).

„The achieving of the full convertibility of the local currency was continued without any turbulences, which is particularly important in a complex institutional environment in BH, so it is recommended to continue such practice and ensure full independence of the CBBH,” it was pointed out by the ECB in its annual assessment on monetary policy and financial stability.

Also, the ECB stresses that the adoption of the Deposit Insurance Law in BH is important for strengthening regulatory banking system.

The European Commission has also praised the CBBH activities in the area of statistics and the progress made related to government finance statistics, as, since October 2020, an important step has been made by delivering data to Eurostat. Improvements have also been achieved related to timeliness and consistency of the submitted quarterly data in the area of statistics of balance of payments and international investment position.

Successful work is confirmed by international acknowledgements including the one awarded to the CBBH by magazine Capital Finance International for the best central bank governance in central and eastern Europe in 2017. This magazine has recognized the modalities by which the CBBH has contributed to the continuing stability of the country during the years of its operations.

KM stability is a basic task of the CBBH without which other economic values could be questioned. The CBBH also manages the official foreign exchange reserves achieved by issuing the local currency, it helps and maintains appropriate payment and settlement systems, coordinates the activities of Banking Agencies of BH Entities which are in charge of issuing operating licences and supervision of banks.

While some results are related to the contribution to the EU integrations and specific reports to the European Commission (EC) and European Integration Directorate, others mean completed processes of upgrade and putting into operations of the Single Registry of Business Entities' Accounts in BH, upgrade and putting into operations of the upgraded giro clearing, upgrade of Central Credit Registry of business entities and natural persons in BH, and harmonisation of statistics with the EU requirements. New methodology and tools for stress tests were developed within FINRA project and IT infrastructure was improved. Foreign debt was regularly serviced, the CBBH foreign exchange reserves were successfully invested with improvements of this process at the operative level.

The existence of the CBBH payment systems for 20 years is the fact confirming that systems in our country can function according to the highest standards in the world, and that there is no excuse for any deviation from excellence. The story about convertible mark is a credible argument that there is something good which connects us. We all equally love convertible mark, as we can trust it. The Central Bank of Bosnia and Herzegovina and the convertible mark have never failed us.