Press statement related to the regular process of the CBBH cash management

February 10, 2017

Pursuant to the Law on the Central Bank of BH, the Central Bank of Bosnia and Herzegovina puts in and withdraw from circulation the domestic currency consisting of KM notes and coins, as legal tender, adhering strictly to the Currency Board arrangement defined by the Law on the CBBH. Central Bank of Bosnia and Herzegovina , in accordance with the Law on the Central Bank of BH, is obliged to ensure regular supply of banknotes and coins of convertible mark, through their putting and withdrawing from circulation, at the request of commercial banks, including the replacement of banknotes and coins that have become unfit for circulation. Through commercial banks, such like currency is withdrawn from circulation and replaced by new notes and coins. Fulfilling of the commercial banks demands to take over KM currency from the vault of the Central Bank of Bosnia and Herzegovina is done in accordance with the Law and regulations of the Central Bank.

KM banknotes, as any other banknotes have their lifetime, because while being in use, they became worn out and damaged. On an annual basis about 20% of KM banknotes that are unfit for circulation are withdrawn from circulation and destroyed, and such notes are replaced by new banknotes. In addition, we should take into account the continuous increase of KM cash in circulation due to the demand for KM by commercial banks, which is about 10% annually. As for coins, it is characteristic to have continuous increase in demand, particularly of small denomination coins.

Current contracts for production and delivery of banknotes and coins of convertible mark were concluded in 2016, exclusively for the purpose of regular supply of banknotes and coins of KM in accordance with assessed cash circulation needs for a longer period. The production of additional quantities of banknotes and coins of this type was carried out by the Central Bank since its establishment until today, and such production is precondition for regular supply of KM cash. Information on the management of cash and detailed information on quantities in circulation are available to the public through regular monthly and annual reports to the Central Bank of Bosnia and Herzegovina that have been published on the web site of the CBBH.

Upon completion of the production process, the Central Bank will deliver a decision on successive issuance of KM banknotes and coins in circulation and published it in the Official Gazette of BiH and the Official Gazettes of the Entities and Brčko District.

Thus, the printing of KM banknotes and coins pursuant to the above mentioned contracts cannot be brought into any connection with the allegations in some media, according to which the production of new quantities of KM banknotes and coins is done for the purpose of their issue without backing, which would be a violation of the Law on the Central Bank of BH and the rules of the Currency Board.

Public Relations Section