The World Savings Day:deposits in domestic currency are higher than deposits in foreign currencies

The value of household deposits in domestic currency in BH is for the first time higher than deposits in foreign currency, which indicates the growth of confidence in the domestic currency and the recovery of savings in BH.

This year, the Central Bank of Bosnia and Herzegovina (CBBH) is promoting the importance of savings through various activities, and with visits from primary and secondary school students, it marks the World Savings Day on October 31. In such occasion gathering with students of the elementary schools "Isak Samokovlija" and "Kovačići" from Sarajevo, and the High School of Tourism and Hospitality and the High Business-Commercial and Trade School Sarajevo, the CBBH, through educational activities, tried to raise the awareness of younger people about the need and importance of savings. And this type of celebration of the World Savings Day is an integral part of the financial education that the CBBH has been conducting in recent years with the aim of strengthening financial inclusion in the manner of responsible financial management for the benefit of the economic development and growth of Bosnia and Herzegovina.

According to the latest available data from the CBBH, total household deposits with commercial banks in BH amounted to KM 14.22 billion at the end of September 2022.

On an annual basis, household deposits, at the end of September, recorded a drop of KM 271.8 million or 1.9%, which is primarily a consequence of the withdrawal of deposits and uncertainty due to the war in Ukraine in the period from March to May, followed by the regrowth of deposits. A change in preference in terms of liquidity is observed, as citizens significantly increase their holdings in deposits that are highly liquid and available in the short term (transaction deposits grow by 10.7%), while a 13.8% drop is recorded in term and savings deposits.

By maturity structure, term and savings deposits in the end of September 2022 amounted to KM 4.70 billion or 33.1% of the total household deposits, out of which, short-term deposits accounted for KM 356 million (7.6%), while long-term ones accounted for KM 4.35 billion (92.4%). Transaction accounts and sight deposits amounted to KM 9.52 billion and accounted for 66.9% of the total household deposits, out of which transaction accounts amounted to KM 5.72 billion, while sight deposits amounted to KM 3.80 billion.

In respect of currency structure, a significant change has taken place recently reflected in the total deposits in the local currency exceeding the total deposits in foreign currencies. Deposits in the local currency reached the amount of KM 7.29 billion accounting for 51.3% of the share, while deposits in euro and in KM with currency indexation to euro amounted to KM 6.26 billion or 44.0%. Savings in other foreign currencies was quite modest amounting to KM 674 million or 4.7% of the share.

Most citizens believe that savings are important, but few of them are able to save regularly on monthly level, particularly these days when inflation is reducing purchasing power. BH citizens save in order to create some reserves for more difficult periods which might come, and a part of them save in order to finance larger purchases or vacations. Local deposit institutions are a safe place for local depositors, and regulatory public institutions carefully monitor their operations in order to ensure that household savings are managed in a regulated and safe way. Household deposits represent the main source of financing for local banks and have by far the largest share of 49.6% in the total deposits with commercial banks, with all the involved institutions devoting much attention to their protection.