Meeting on the Amendments to the Law on the Central Bank of Bosnia and Herzegovina

Changes in the Article 36 that the CBBH is proposing in the application of the Reserve Requirements (RR) regulations that the CBBH imposes on commercial banks were discussed during a meeting with all commercial banks of the Republika Srpska. The meeting was held on April 9, 2003 in the premises of the Main Bank of the Republika Srpska of the CBBH and co-hosted by the Central Bank of BH (CBBH) and the Bankers' Association of Republika Srpska.

The proposed changes include a broadening of the RR base to all deposits and borrowed funds, including foreign deposits, instead of only KM, which was the case until now. This would bring the KM into the equal position to foreign exchange currencies.

Another proposal is the elimination of the KM cash banks hold in their vaults as an eligible asset for fulfilling the RR of banks. It is also proposed that the minimum range RR rate that the Governing Board of the CBBH can set should be lowered to below 10 percent, instead of the current ten to 20 percent. The range would be specified in the CBBH Law as 'up to 20%'. The current RR imposed on banks is ten percent.

Both of the proposed changes to the implementation of the RR would have the effect of tightening if the ratio level is not reduced below 10%. The banks were informed that the analysis of the appropriate level for the new RR was still not complete and the Governing Board of the CBBH has not yet taken a decision. Commercial banks therefore have the opportunity to make submissions to the CBBH on this issue.

The copy of the proposed amendments to the Article 36 of the CBBH Law was delivered to all commercial banks for their comments. Representatives of the commercial banks present at today's meeting stated they will need the adjustment period for implementation of new RR regulation. The CBBH Governing Board will consider their views before taking any decisions. The CBBH has sent the proposed amendments to the Article 36 to the BH Presidency, with the request to be put into the parliamentary procedure under urgency.

The CBBH held a similar meeting with banks from BH Federation in Sarajevo on April 2, 2003.

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