CBBH Disappointed With Refusal of the Initiative for Transfer of Authority Over the Banking Supervision

The Central Bank of Bosnia and Herzegovina (CBBH) is disappointed with the position of Representatives in the National Assembly of Republika Srpska who refused to accept the CBBH initiative to transfer authority over the banking supervision from Banking Agencies of both Entities to the CBBH.

“Yesterday’s Decision of Representatives, as well as the earlier Conclusion made by the Republika Srpska Government, which refuses to transfer authority over the banking supervision, are disappointing and show that politics do not want to look at this issue as the professional issue”, CBBH Governor Kemal Kozarić stressed.

“Our initiative for the transfer of authority over the banking supervision is motivated only with the objective to provide the new quality to the BH banking system through the improvement in supervision and with that, better service for BH citizens. Unfortunately, here we have misunderstanding. The Government of Republika Srpska behaves as banks are holding its money exclusively, instead of citizens’ money, that is, money of depositors”, Kozarić said and added that the CBBH is the central part of the banking system in the country and independent state institution of all commercial banks in the country that has managed to complete all tasks, it had so far, successfully. Also, all local non-cash payments which companies and citizens perform in commercial banks throughout the country are settled through the payments system owned and operated by the CBBH. Therefore, Governor concluded, it would be logical to have also the banking supervision transferred to the CBBH.

Unstoppable process of the BH banking sector enlargement also goes in favor of transfer of authority over the banking supervision to the CBBH. “Banking sector in BH is unified. Commercial banks are operating in both BH entities and the process of banks’ enlargement could take us into situation where we would have only two or three banks with their headquarters in Republika Srpska, which would made current system of financing of the Banking Agency of RS unsustainable and the operations’ expenses would have to be transferred at the expense of the Entity’s budget”, Kozarić stressed.

Existence of the Agency for Deposit Insurance of BH is the example of the successful transfer of the banking activity from the entity to the state level, which was performed without problems and political restraints. Successful transformation of the Deposit Insurance Scheme was recognized by BH citizens, which can be seen from the data on constant growth of citizens’ deposits, which increased by 33, 2% over the period from October 2004 to October 2005.

Governor Kozarić added that the CBBH will not give up on the initiative to transfer the banking supervision under its authority. “We hope that this or the next Government of Republika Srpska will recognize advantages of models which we have offered and make possible for BH citizens to have quality of the supervision like most citizens of European countries do”.