The European Commission (EC) and the European Central Bank (ECB) gave positive assessments on the activities of the Central Bank of Bosnia and Herzegovina that took place during 2020, in extremely complex pandemic conditions, announced the Central Bank of BiH.
“The Central Bank of Bosnia and Herzegovina (CBBH) continued to maintain full convertibility of the domestic currency during 2020, despite the challenges related to the economic consequences of the pandemic caused by the COVID-19 virus. Monetary policy continues to be based on a currency board arrangement that enjoys a high level of credibility with the general public and which is key to monetary stability based on the independence of the Central Bank,” it was concluded during the Economic and Financial Dialogue between the European Union (EU) and Western Balkans and Turkey, which was held on July 12, 2021.
CBBH reminded that for the purposes of the annual Economic Dialogue between the EU and the countries of the Western Balkans and Turkey, the EU institutions regularly conduct analyses related to the implementation of economic policies, and provide reviews on previously discussed issues and guidelines.
In its annual assessment related to monetary policy and financial stability, the ECB stressed that the CBBH has made a key progress in implementing the guidelines formulated in the previous year within the Economic Dialogue between the EU and Western Balkans and Turkey. The implementation of full convertibility of the local currency was continued without any turbulences, which is particularly important in complex institutional environment in BH, so it is recommended to continue such practice and ensure the full independence of the CBBH.
Besides, based on the ECB recommendations, during 2020, additional analytic research has been introduced related to inflationary expectations and lending, which is carried out regularly. Macroeconomic model has been developed, and based on it, the CBBH carries out and publishes macroeconomic projections. Also, the ECB points out that the adoption of the Deposit Insurance Law in BH is important for strengthening regulatory banking system.
The European Commission has also praised the CBBH activities in the area of statistics and the progress made related to government finance statistics, as, since October 2020, an important step has been made by delivering data to Eurostat. Improvements have also been achieved related to timeliness and consistency of the submitted quarterly data in the area of statistics of balance of payments and international investment position, it is said in a statement.