The CBBH Denies Allegations of the Centre for Civic Initiatives

The Central Bank of Bosnia and Herzegovina (CBBH) strongly denies false and unfounded allegations of the Centre for Civic Initiatives (CCI) from its report dated 30 May, 2016, entitled “Condition of the Nation”, according to which over half of the money supply is not convertible, and the currency stability is jeopardized.

The CBBH would like to emphasize that the CCI has presented inaccurate information which may indicate a violation of the Law on the CBBH and put in question the full coverage of the domestic currency, the convertible mark.

The CBBH conducts monetary policy based on the Currency Board arrangement, which means that each convertible mark which the CBBH puts into circulation, has full coverage in foreign exchange reserves, in accordance with the Law on the CBBH. According to data from the balance sheet of CBBH for April 2016, the coverage of monetary liabilities by the foreign exchange reserves, or the coverage of the domestic currency by the foreign exchange reserves amounts to over 100%, i.e. 107.35%. The stability of the domestic currency has never been brought into question, thanks, first of all, to the commitment of the CBBH to consistently and strictly implement the policy of the Currency Board. The arguments to this statement are monthly reports of the CBBH and the CBBH Annual Report, approved by an independent external auditor, and adopted by the BH Presidency and both Houses of the BH Parliamentary Assembly.

Convertibility of the local currency, also, is not in question - the convertible mark may be converted or exchanged for euro at a fixed rate, according to the CBBH Law or for any other currency, at the current exchange rate, in any commercial bank in Bosnia and Herzegovina.

The stability of the monetary system in any country is based on confidence in the credibility of monetary policy and the Central Bank. Undermining the credibility by inaccurate statements, indicated in the report of the CCI, can lead to unforeseeable consequences and cause enormous damage to monetary policy and financial stability of a country.

Considering the specific role of monetary institutions, and thus the CBBH, too, we remain open for cooperation and providing the explanations about all aspects of monetary policy of the CBBH.