Basis for the Calculation of the Required Reserves Increases

Over the first ten days of September 2003, the level of banks' deposits used as the basis for the calculation of the Required Reserve (RR) reached KM five billion for the first time.

With the implementation of the Decision on the RR, total deposits of banks, which are made of KM and foreign exchange deposits, increased by KM 476,3 million or 10,5 percent over the period from June 1, which is the day when the Decision on the RR became effective, until September 10, 2003.

From September 10, 2002, until September 10, 2003, deposits in banks denominated in KM increased by KM 500 million or 30 percent.

The increase of level of banks' deposits shows that the citizens of BH have more confidence in the banking system and increasing the proportion of their savings that they hold in their bank deposits. Also because of the rapid increase in their deposits, the liquidity of commercial banks is extremely high and that banks are holding significantly higher amount of the money on their accounts than they are obliged to by the RR.