Perspectives of Application of Currency Board Arrangement with Special Emphasis on Bosnia and Herzegovina

2012 ◽  
Author(s):  
Mehmed Ganii
Keyword(s):  
Bosnia And Herzegovina ◽  
Currency Board

scholarly journals Business cycle synchronization and monetary policy in Bosnia and Herzegovina

Bankarstvo ◽  
2021 ◽  
Vol 50 (2) ◽  
pp. 8-20
Author(s):  
Dragan Jović
Keyword(s):  
Monetary Policy ◽  
Business Cycle ◽  
Central Bank ◽  
Bosnia And Herzegovina ◽  
Great Part ◽  
Currency Board ◽  
The Business Cycle ◽  
Further Development ◽  
Discretionary Monetary Policy ◽  
New Instruments

By adopting the currency board at the end of the last century, and by pegging its exchange rate to the Euro, a quarter of a century ago, Bosnia and Herzegovina surrendered a great part of its monetary policy in the hand of European Central Bank in the hope that the synchronization of the business cycle will make foreign monetary policy completely suitable for Bosnia and Herzegovina. At the same time during these two decades, the Central Bank of Bosnia and Herzegovina has been developing and using reserve requirement and remuneration as discretionary instruments of monetary policy. The research shows that the domestic business cycle and the foreign one are relatively weakly synchronized compared to other countries' degree of synchronization, and by this findings current discretionary monetary policy and its further development and enrichment with new instruments is fully justified. Bosnia and Herzegovina must continue with developing its own discretionary monetary policy without relying on foreign monetary policy.

scholarly journals Analysis of Minsky moment in the system of currency board in Bosnia and Herzegovina

2021 ◽  
Vol 18 (2) ◽  
pp. 63-78
Author(s):  
Jelena Vitomir ◽  
Đorđe Lazić ◽  
Novo Plakalović
Keyword(s):  
Economic Crisis ◽  
Bosnia And Herzegovina ◽  
Financial Stability ◽  
Financial System ◽  
Currency Board ◽  
Vector Autoregression Model ◽  
Monetary System ◽  
Global Economic Crisis ◽  
The Will ◽  
The Common

In the past decade the world faced the consequences of the global economic crisis proclaimed in 2008. The common case for everyone was a financial crisis in which every country bore the burden of the crisis in its own way, and in each country generators of the crisis appeared in different segments. In the 1980s American economist Hyman P. Minsky wrote about this topic, explaining the characteristics of financial crises in rigid financial systems. The aim of this paper is to understand the causes and the consequences of the crisis through creation, growth and bursting of the credit bubble in separate market segments in Bosnia and Herzegovina through the system of currency board. Through the application of vector autoregression model (VAR) the responses to shocks, recorded on the side of demand for loans which were generated in the capital markets and in the construction sector, and the credit shock of demand, which formed, developed and then exploded after the proclamation of the global economic crisis in Bosnia and Herzegovina, were analyzed. Interpretation of the results through the light of hypothesis of Minsky moment is corroborated by an additional fact that a rigid monetary system like currency board did not provide the necessary mechanisms for the maintenance of financial stability. Stability of the financial system of Bosnia and Herzegovina was saved exclusively by the will of parent banks from abroad whose daughters participate in the financial system of Bosnia and Herzegovina.

scholarly journals Balance of Payments Deficit and Currency Board Arrangement Sustainability in Bosnia and Herzegovina

2020 ◽  
Vol 23 (s1) ◽  
pp. 43-56
Author(s):  
Siniša Kurteš ◽  
Srđan Amidžić ◽  
Perica Rajčević
Keyword(s):  
Foreign Aid ◽  
Bosnia And Herzegovina ◽  
Current Account ◽  
Current Account Deficit ◽  
Global Market ◽  
Balance Of Payments ◽  
Constant Current ◽  
Currency Board ◽  
Working Population ◽  
Highly Educated

Abstract Constant current account deficit in Bosnia and Herzegovina results from a large foreign trade imbalance, which in turn is a consequence of uncompetitiveness of the economy in the global market. The current account deficit is mainly financed by foreign remittances, foreign aid, and least of all by foreign investment. Lately, the outflow of the active, working population has been decreasing the labor force (especially the qualified and highly educated employees), as well as the domestic demand, which will exert further pressure on the balance of payments account. On the other hand, monetary policy is operating under the principles of currency board, i.e. applying a firm exchange rate, so the question arises whether and to what extent it is sustainable, under the conditions of a high current account deficit. The purpose of this paper is precisely to examine the relation between the deficit of balance of payments and the sustainability of the currency board arrangement in Bosnia and Herzegovina, under such conditions.

scholarly journals Могући правци развоја монетарне политике БиХ у циљу подстицања економског раста // Possible tendencies of BiH monetary policy in encouraging the economic growth

2014 ◽  
Vol 12 (20) ◽  
pp. 213
Author(s):  
Бранка Топић-Павковић
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Central Bank ◽  
Bosnia And Herzegovina ◽  
Open Economy ◽  
Current Account Balance ◽  
Currency Board ◽  
Policy Model ◽  
Currency Boards ◽  
And Control

Резиме: Осигурати раст националне економије, уз истовремену унутрашњу и спољну стабилност цијена, поставља се као примарни задатак економске политике. Избор валутног одбора као модела управљања монетарном политиком обезбјеђује раст повјерења у домаћу валуту, макроекономску стабилност и јачање кредибилитета централне банке, посебно у земљама транзиционих и реформских процеса. Полазећи од ограничења овог модела монетарне политике, питања домаће конкурентности и контроле биланса текућег рачуна постају све битнија. У условима немогућности интервенције монетарне политике штетне посљедице на извоз и економски раст земље несумњиво показују да класични монетарни одбор представља погодно средство монетарне стабилизације, али не и механизам динамизирања привредног раста. Рад се фокусира на избор облика монетарне политике која би у датим условима могла да обезбиједи највећи допринос расту и привредном опоравку. Циљ рада је указати на могуће модификације постојећег система монетарног одбора у Босни и Херцеговини, анализом савремених валутних одбора и искустава земаља чланица које су примјењивале овај режим прије приступања Европској (монетарној) унији. Резултати истраживања потврђују низ предности које монетарни одбор пружа малим и отвореним економијама, али истичу и недостатке који доводе у питање одрживост овог аранжмана монетарне политике и воде модификацији постојећег модела валутног одбора, што би проширило дјеловање Централне банке Босне и Херцеговине.Summary: To ensure the growth of the national economy with simultaneous internal and external price stability is set as the primary goal of economic policy. Choosing the currency board as a model of monetary policy provides increased confidence in the local currency, macroeconomic stability and strength of the central bank credibility, especially in development countries. Considering the constraints of the currency board, national competitiveness and control of the current account balance are becoming very significant questions. In terms of the inability of monetary policy interventions to effect on exports and economic growth of the country, undoubtedly show that classical monetary board is a convenient measure of monetary stabilization but not the mechanism of intensification of economic growth. This paper focuses on the choice of monetary policy model to the given conditions which could provide the growth and economic recovery. The aim of this paper is to emphasize the possible modification of the existing system of currency board in Bosnia and Herzegovina, by analyzing modern currency boards and experiences of member states that have followed this regime before accession to the European (Monetary) Union. The results confirmed a number of benefits that monetary board provides for a small and open economy, but also point out the shortcomings that stress questions about the sustainability of this arrangement and possible tendencies of modification of existing model of the currency board, primarily with widening the instruments and action of the Central Bank of Bosnia and Herzegovina.

An Assessment of the Currency Board Regime in Bosnia and Herzegovina

2006 ◽  
Vol 42 (6) ◽  
pp. 46-58 ◽  
Author(s):  
Nadja Kamhi ◽  
Vivek H. Dehejia
Keyword(s):  
Bosnia And Herzegovina ◽  
Currency Board

Monetary Policy in Bosnia and Herzegovina Under the Currency Board Regime

2009 ◽  
Vol 47 (2) ◽  
pp. 21-36 ◽  
Author(s):  
Shirley J. Gedeon ◽  
Dzenan Djonlagic
Keyword(s):  
Monetary Policy ◽  
Bosnia And Herzegovina ◽  
Currency Board

scholarly journals The Political Economy of Currency Boards: Case of Bosnia and Herzegovina

2010 ◽  
Vol 5 (2) ◽  
pp. 7-20 ◽  
Author(s):  
Shirley Gedeon
Keyword(s):  
Political Economy ◽  
Monetary Policy ◽  
Exchange Rate ◽  
Bosnia And Herzegovina ◽  
Financial Stability ◽  
Global Financial Crisis ◽  
Central Banking ◽  
The Political ◽  
Currency Board ◽  
Currency Boards

The Political Economy of Currency Boards: Case of Bosnia and HerzegovinaCurrency Board Arrangements (CBAs) operate in several post-socialist European economies as an alternative to traditional central banking. The CBA literature primarily focuses on the discipline of the fixed exchange rate, suggesting that the gain of reduced exchange rate volatility and monetary stability outweigh the loss of independent monetary policy. It does not address the role and impact of foreign ownership of the banking system on currency board dynamics. Through a case study of the CBA in Bosnia and Herzegovina over a ten-year period, including the global financial crisis of 2008-09, this paper suggests that monetary policy is not abandoned; it is decentralized and privatized and critical to the maintenance of financial stability of the CBA.

scholarly journals Currency Board Policy and Economic Development of Bosnia and Herzegovina in the Context of European integration

2018 ◽  
Vol 15 (27) ◽  
Author(s):  
Željko Marić
Keyword(s):  
Monetary Policy ◽  
Economic Development ◽  
European Integration ◽  
Bosnia And Herzegovina ◽  
Open Economy ◽  
Domestic Currency ◽  
Currency Board ◽  
Negative Consequences ◽  
Deductive Method ◽  
Discretionary Monetary Policy

Bosnia and Herzegovina is a small and open economy in transition with great distrust in local authorities and institutions. The country applies a currency board as the only acceptable and optimal exchange rate system in order to protect its monetary policy from political influences. The strict rules of the currency board provide monetary stability and confidence in the domestic currency, but disable the pursuit of discretionary monetary policy and limit autonomous fiscal policy for the purpose of stimulating an investment cycle and economic development without coordinated accompanying support of monetary policy.The subject of this paper is an analysis of the short-term and long-term effects of the currency board application in Bosnia and Herzegovina in conditions of increasing liberalization through the process of European integration. Given the negative consequences and limitations of the currency board system, this paper analyses in particular the possibility of introducing a central bank with discretionary monetary policy instruments, as well as other measures that can influence the overvaluation of the domestic currency exchange rate.The scientific methods used in the paper are: inductive-deductive method, descriptive method and statistical method. The conclusion and recommendations areobtained by using inductive-deductive method and descriptions of current economictrends based on numerous secondary statistical data presented in the tables andcharts.

scholarly journals Perspectives of currency board in Bosnia and Herzegovina

2017 ◽  
pp. 108-125
Author(s):  
Ninoslav Gregovic ◽  
Nedzad Hodzic
Keyword(s):  
Bosnia And Herzegovina ◽  
Currency Board

scholarly journals Inflation, Employment and FDI in Bosnia and Herzegovina

2018 ◽  
Vol 15 (26) ◽  
Author(s):  
Goran Popović ◽  
Maja Ibrahimbegović
Keyword(s):  
Bosnia And Herzegovina ◽  
Phillips Curve ◽  
Aggregate Demand ◽  
Business Environment ◽  
Currency Board ◽  
Simple Linear Regression ◽  
Monetary System ◽  
Demand Correlation ◽  
Board System

The monetary policy of Bosnia and Herzegovina (hereinafter referred to as BIH) operates under the currency board system, responsible for strengthening the market economy and price stability. On the other hand, the economy of BIH is facing long-term unemployment, unfavorable business environment and feeble competitive position. This discourages economic development. Further retaining the currency board system in BIH attracts great interest. The paper analyzes the relation among inflation, unemployment and foreign direct investment (FDI). Statistical analysis (coefficient of correlation and simple linear regression (period 2004/2014)) indicates that there is no inversion similar to the Phillips curve between inflation and unemployment. Thus, it is implied that BIH renounces employment, aggregate demand and economic growth for the sake of stable prices. Moreover, the ratio of inflation and participation of FDI in GDP is inverse with a negligible correlation. Analyses demonstrate that there is no optimal combination of inflation and unemployment in BIH that would improve business environment and stimulate FDI and aggregate demand. Correlation and regression analyses fail to provide the arguments to statistically challenge the currency board as the monetary system model of BIH.

Sign in / Sign up

Export Citation Format

Share Document