Decision on Determining Required Reserves and Compensation on the Amount of the Reserves 4/13/2016 Tweet The Governing Board of the Central Bank of Bosnia and Herzegovina (CBBH) has passed the Decision on Determining and Maintaining Required Reserves and Defining the Compensation of the CBBH to Banks on the Amount of Reserves. According to this Decision, the base for the required reserve calculation includes deposits and borrowed funds, regardless of the currency in which they are denominated. The Decision determines the single rate of required reserve of 10% which is applied by the CBBH on the base for the required reserve calculation. The Decision also defines that the CBBH does not calculate a compensation on the amount of required reserve funds. On the amount of funds exceeding the required reserve, the CBBH calculates a compensation at the rate which is equal to 50% of the rate applied by the European Central Bank (ECB) on the deposits of commercial banks. By the Decision on introducing a negative interest rate of compensation on the amounts of excess funds above the required reserve in reserve accounts, the CBBH would like to stimulate commercial banks to use the mentioned funds to extend loans to households and companies. Excess funds above the required reserves of commercial banks in reserve accounts with the CBBH have recorded a continuous growth for a longer period of time, and the banks currently hold around KM 2.5 billion in the form of excess funds in reserve accounts. This Decision shall take effect on the date of its publishing in the „Official Gazette of BH“ and it shall be applied from 01 July 2016.
