Foreign Currency Deposits Should Also Become Subject to the Reserve Requirement

The Governing Board of the Central Bank of Bosnia and Herzegovina (CBBH), following consultations with the International Monetary Fund, decided at its meeting on 27 February commercial bank foreign currency deposits should also be subject to the reserve requirement the CBBH imposes on commercial bank deposits.

At present, the reserve requirement applies only to deposits denominated in KM. This disadvantages the KM compared to the euro and other foreign currencies. By applying the reserve requirement to all deposits, the CBBH will be treating all currencies equally.

The change in the base for the reserve requirement will not be used to increase the overall requirement placed on the banks. The level of the ratio will be reduced so that the overall obligation placed on the banking system will be approximately the same after the change is made.

This change will require an amendment to the CBBH Law. The CBBH will draft the specific amendments once analysis of the deposit data has been completed and the proposed amendments will be submitted to the State Presidency for their approval.