Meeting on Possibilities of Development of the Money Market in BH

The Meeting on Subject "Possibilities for the development of the Money Market in Bosnia and Herzegovina", which was organized by the Economic Institute Sarajevo and the Central Bank of BH (CBBH), was held on July 20, 2004, in the Central Bank of BH in Sarajevo. The reason for organization of this meeting was the beginning of the Project entitled "Development of the money market in Bosnia and Herzegovina", which is implemented by the Economic Institute Sarajevo with the financial support of the USAID and the cooperation of the Urban Institute from Washington as a part of the support project to the local research institutions. The Project "Development of the money market in Bosnia and Herzegovina" is discussing the issues of interest for the largest number of participants in the financial system in BH. During the discussion, participants stressed different aspects and problems connected with the development of this market and the special attention was given to the existing legislation in the area of commercial banking and to the problem of rigidity of some legal provisions (such as maturity harmonization) in situation of the high level of liquidity of the commercial banking sector, on one hand, and very low liquidity of the business sector, on the other hand. Majority of participants agreed that the State Government and Entities' Governments should be the first issuers at the money market. It will be very important for the future development of the money market in BH that the offered instruments have a high level of liquidity and that these instruments are issued by institutions-issuers with the high rating (governments, the CBBH, the highest-ranked commercial banks). Development of the money market in BH will not be only significant for the commercial banks and three levels of the Government, but also for the other participants of the financial system, such as insurance companies which, similar to the commercial banks, have problems in portfolio structuring due to lack of instruments of money and capital markets, as well as privatization investment funds, future investment funds and private pension funds. The need for the development of the money and capital markets with the smallest possible number of political obstacles, with economic rationality, which includes the future development of mutual quotations of money market instruments in the countries of the former Yugoslavia and Southeast Europe Region was stressed at the end of the discussion. The discussion, in which local and international experts participated, representatives of commercial banks, governmental institutions, academic community and the CBBH, was moderated by the Governor of the CBBH Peter Nicholl and the Chairman of the Project "Development of the money market in Bosnia and Herzegovina", Dr Fikret Čaušević.

Public Relations Section
The Central Bank of Bosnia and Herzegovina
Almir Salihović