Conference „20 Years of Stability"
Governor Senad Softić, Ph.D.
Welcome speech
Sarajevo, 22 September 2017
Your excellencies, distinguished guests,
I would like to welcome you to this Conference and thank you for recognizing
the importance of our institution's anniversary.
Central banking in Bosnia and Herzegovina has a history much longer than
20 years.
However, Bosnia and Herzegovina, as a sovereign country, has established
its first Central Bank (the Central Bank of Bosnia and Herzegovina) in 1997,
with a mandate guaranteed by the Constitution to implement monetary
policy throughout the entire country under the currency board arrangement.
The main objective of the Central Bank has been to achieve and maintain the
stability of domestic currency, the convertible mark, the only legal tender in
Bosnia and Herzegovina. The task was very complex because at that time
there were four currencies in use in Bosnia and Herzegovina.
The Constitution defined that the first Governing Board of the Central Bank
would include the Governor appointed by the International Monetary Fund
in consultation with the Presidency of Bosnia and Herzegovina, and three
members nominated by the Presidency of Bosnia and Herzegovina. Due to
specific circumstances related to the establishment of the Central Bank, it
was also defined that the first Governor would not be a citizen of Bosnia and
Herzegovina or a citizen of any of the neighboring countries.
In the years of Central Bank development that followed, we saw three phases.
The main functions of the Central Bank, as defined by the Central Bank Law,
were established in the period until 2000. Since 11 August 1997, all prices
and all payments have been denominated in convertible marks. Since the
beginning of 1999, the convertible mark has been the only legal tender in
internal payment operations, supported by the modern payment systems in
the Central Bank of Bosnia and Herzegovina, introduced in 2000. During this
time, the Central Bank was growing and expanding the network of its
organizational units in Sarajevo, Mostar, Banja Luka, Brčko and Pale.
During the following ten year period, the focus was on the strengthening of
the financial system and macroeconomic stability. Since the very beginning
of our operations, long before other institutions in the country, we have
recognized the importance of macroeconomic statistics and invested efforts
in its development. Having in mind the significance of macroeconomic
statistics for the public, and by implementing constantly the adjustments
with the international standards, we have managed to provide the
international relevance of our country.
By using the mechanism of banking supervision coordination, we have
managed to consolidate the data from Entities' Banking Agencies, reporting
on the financial soundness indicators for the entire banking system.
Several years later, these activities resulted in:
 the continued monitoring of systemic risks in the Standing Committee
for Financial Stability, chaired by the Central Bank,
 regularly performed macroeconomic stress tests, and
 the signed memoranda on understanding and cooperation with
regulators from the home countries of the banking groups operating in
Bosnia and Herzegovina.
We have also established the Central Credit Registry which helps banks to
manage risks, having insight into the credit histories of their clients in the
entire country.
Our cash operations underwent a serious test in October 2008, when, our
citizens, in panic, withdrew significant amount of deposits from banks in only
several days. Thanks to the prompt response, we provided enough foreign
currency, mostly euro, confirming in that way the full coverage of the
convertible mark.
During the recent years, in the third phase, the Central Bank has had an
increasing prominent role in fulfilling the international obligations of our
country. During this period, we continue to strengthen our functions and
resources.
In addition to regular publications, we prepare other analytical publications,
such as the ECB Assessment on Financial Stability for EU Candidate and
Potential Candidate Countries.
We have representatives in many working bodies, groups and institutions at
the local and international level, particularly in the European integration
field, for example, with the aim to prepare the answers for the European
Commission questionnaire.
Through the intense cooperation between the Central Bank and its partner
institutions, such as the European Central Bank, we are working on:
 the implementation of new rules and policies,
 changing our practices and
 training our staff in compliance with the European standards.
This contributes to the development of the culture that will help the entire
society to recognize the Central Bank's independence as a public interest.
We also highly appreciate the support of the International Monetary Fund,
which had a key role in the establishing of the Central Bank twenty years ago.
We hope that such support will continue in the future, especially in the
activities aimed at the strengthening of the banking system in Bosnia and
Herzegovina.
We also appreciate the valuable support which we received during this
period from the Office of the High Representative in Bosnia and Herzegovina
and institutions such as the World Bank, USAID, GIZ and other, for significant
projects we implemented together.
In the future, the Central Bank will continue with its mission to:
 harmonize with the EU standards,
 modernize and improve its work, payment systems, cash management
operations,
 increase institutional quality by using the best practices and
experiences of other, fully developed central banks.
In the end, allow me to say that I am proud that the Central Bank is a fully
independent, credible and transparent central bank, presenting the anchor
of the country's macroeconomic stability.
For all these years, in the complex reality of Bosnia and Herzegovina, one
thing has been certain: the value of convertible mark, expressed in euro, has
never been questioned.
I also have to emphasize that this institution's successful performance is
brought about by its human resources. The Bank's highly skilled employees
have been dedicated to developing this institution and achieving the results
that we are proud of today. The success that we have achieved during the last
twenty years and the contribution we have made to the society that we serve
are largely due to the trust invested in the Central Bank.
Therefore, my dear colleagues, representatives of the government and
friends, representatives of the media that have professionally reported on
our work, thank you for the support that you have always provided to the
Central Bank and its objectives! The Governing Board, the Management and
the employees of the Central Bank will continue to work in the way which
will prove worthy of your confidence.
Thank you once again for celebrating with us this important anniversary and
we wish you a pleasant stay in Sarajevo and Bosnia and Herzegovina.
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