Senad Softić: We will carefully monitor developments and possible
changes
Media statement by Mr Senad Softić, Governor of the Central Bank of Bosnia and Herzegovina,
on possible impacts of the euro introduction in Croatia. Statement issued on 7 August 2020.
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The Central Bank of BH does not expect major challenges related to the introduction of the euro
in Croatia, said the Governor of the Central Bank of BH
He said that the foreign exchange risk in transactions with Croatia will remain insignificant, as
long as the Currency Board regime is in force in BH, or until BH introduces the euro.
How much will the adoption of the euro in Croatia, sooner or later, have an impact on Bosnia and
Herzegovina, given the border connections and the turnover that still exists?We do not expect
major challenges regarding the introduction of the euro in Croatia. On the contrary. The
exchange rate regime in force in Croatia is a managed fluctuating exchange rate. The fact that
Croatia is in ERM II means, among other things, that the CNB has successfully maintained the
exchange rate of the kuna against the euro in a certain narrow spread. Therefore, fluctuations in
the exchange rate of the kuna against the euro, and consequently against the KM, were not
strong. This means that foreign exchange risk in the financial system and the real sector, from
this aspect, was not emphasized. With the introduction of the euro, foreign exchange risk in
transactions with Croatia will become negligible, as long as the Currency Board regime is in
place in BH, or until BH introduces the euro. Therefore, when Croatia introduces the euro, the
risks of doing business with Croatia will be lower because the foreign exchange risk of changes
in the value of the kuna against the euro will be eliminated. Also, exchange operations (currency
exchange operations) will be simpler because the same money will be used in 17 other
countries. It is possible that in the medium term, the Croatian economy will become more
integrated and turn to countries that have the euro. But I repeat, there should be no major
challenges. The CBBH will monitor the developments very carefully and take measures in time, if
necessary.