Regulatory Alerts2008-11-24
Chapter IV Monetary Function and Activities of the Central Bank
The Central Bank of Bosnia and Herzegovina is mandated to maintain a currency board arrangement where its monetary liabilities are fully backed by net foreign exchange reserves and the official exchange rate is fixed at one convertible mark to one German mark. The institution guarantees unlimited convertibility of the currency at this fixed rate and is restricted from engaging in money market operations or accumulating foreign reserves beyond specific capital thresholds. Additionally, commercial banks are required to hold mandatory reserves with the Central Bank, subject to strict compliance penalties and interest payments on excess holdings.
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