exchange problems and the currency board will be unable to protect the country from those shocks. indeed, it could become one of the victims of those shocks as politicians look for scapegoats to explain the country ’ s economic problems to the people. foreign investment is increasing. in 1999 for example, direct foreign investment was 50 % higher than in 1998 and though we do not yet have figures for 2000, i am sure it has risen strongly again. but while this growth rate sounds spectacular, it is from a very low base. direct foreign investment into bh in 1999 is estimated to have been km 170 million. the current account deficit for that year was km 1. 4 billion. so private foreign investment financed just 12 % of the current account deficit in that year. bh needs to be increasing private foreign investment by around 200 % a year over the next two years rather than 50 % a year if the current economic growth rates are to be sustainable when the official aid flows slow down. this target is possible. the arrival here of foreign banks from austria and croatia shows that there is increased interest from foreign investors. but the climate for private investment in bh is still far from supportive. this applies to local investment as well as foreign investment. there are still problems in the legal system, which is incomplete, the licensing and regulatory systems, which are far too bureaucratic, intrusive and multi - level, and in the financial system, which is still relatively weak. improving the environment for private investment, both local and foreign, is the key economic issue facing this country. it is this that will determine whether bh has a sustainable economy – and whether it is a country in which good students like yourselves should stay to be a part of its future. the banking sector as i said in the last section, a weak financial sector is one of the factors that hampers private investment in bh. the good news is that this gloomy picture finally began to change in 2000. i will mention just a few of the highlights. · first, the payments system underwent fundamental reform. the old state - owned centralised system that had a monopoly was closed. it has been replaced with a modern european - type system with two clearing houses, a rtgs one and a giro one, owned and operated by the central bank and payments are being conducted by the commercial banks. the suppliers we used had put similar systems into place in nine other european countries. but it was done more quickly in bh than anywhere

we introduced a new integrated risk management develop compliance function. work on changes in digital payments and digitalization of finance we are paying attention to develop new systemic stability indicators like liquidity and solvency stress testing we have significantly improved our macro analytical capabilities producing halfyear forecast and our own nowcasts for main macroeconomic variables. number of our working papers has increased last but not least we have significantly increased our transparency and communication policies. it is not only about using social media and press releases but explaining out policies and views in interviews, as well as being more responsive to all questions we are facing. however we are aware that a lot needs to be done in the future. let me mention just a few of those. 1. first is the greening of finance. there is an old saying : be the change you want to see in the world. so, we need to improve our own carbon footprint and be more environmentally friendly. cbbh already express interest to participate in initiatives regarding climate change and managing climate related risks in financial sector. 2. second are questions of inclusion. we are doing efforts regarding financial inclusion and education. for bosnia and herzegovina this is very important issue specially regarding sustainable remittances. in the cbbh we pay special attention to gender equality aspect, our management team has more than 50 % female managers. but generally, in the country we need to do more regarding inclusion, especially regarding gender equality. imf has recently identified that gender issues can be macro - critical. 3. third, much more needs to be done in areas of cyber - resilience. cyber risks are on the rise. we take this issue seriously improving our cyber security and implementing cyber risk assessments. but we need to do more on general coordination in this area. ladies and gentlemen, it is not only the situation in bih, but in the world as a whole that is uncertain and volatile. last month gathering of central bankers at jackson hole has clearly confirmed this worldview. unprecedented challenges are ahead of central banks. the cbbh will continue maintaining its monetary policy and stability and continue further improvements of our operations insuring our credibility as the most important asset any central bank have. i am personally an optimistic about the future and working together is the only way to move from crisis to recovery. 3 / 3 bis - central bankers'speeches