Decision on the Method of Conducting Transactions to Increase and Decrease Funds in the EUR Reserve Account

Based on Article 7, paragraph 1, point b), and Articles 36 and 70 of the Law on the Central Bank of Bosnia and Herzegovina ("Official Gazette of BiH", nos. 1/97, 29/02, 8/03, 13/03, 14/03, 9/05, 76/06, and 32/07), the Governing Board of the Central Bank of Bosnia and Herzegovina, at its 7th meeting held on July 28, 2023, and its 8th meeting held on August 29, 2023, adopts

DECISION on the method of conducting transactions to increase and decrease funds in the EUR reserve account

Article 1. (Subject of the Decision) This Decision regulates the method of conducting transactions to increase and decrease funds in the EUR reserve account, which the Central Bank of Bosnia and Herzegovina (hereinafter: the Central Bank) conducts with banks in Bosnia and Herzegovina (hereinafter: the bank), in accordance with the Central Bank's regulation on the determination and maintenance of required reserves and the determination of fees on the amount of reserves.

Article 2. (Increase and Decrease of Funds in the EUR Reserve Account) (1) The Central Bank performs increases and decreases of funds in the EUR reserve account based on the bank's request, specifically:

• the bank's request to increase/decrease the EUR reserve account based on deposits/withdrawals via accounts abroad (hereinafter: request for deposit/withdrawal – EUR reserve account), for the amount of funds deposited/withdrawn in EUR currency,
• the bank's request to increase/decrease the EUR reserve account based on the transfer of funds from/to the KM reserve account (hereinafter: request for internal purchase/sale of KM – EUR reserve account) for the equivalent amount of funds transferred from/to the KM reserve account in EUR currency. (2) A working day is any working day as defined by the Central Bank's regulation on the determination and maintenance of required reserves and the determination of fees on the amount of reserves, except for the execution of transactions via the Central Bank's account abroad and the bank's EUR reserve account, regarding which the working days of the Target system defined by Eurosistema regulations also apply.

Article 3. (Submission of Requests) (1) The bank submits the request referred to in Article 2, paragraph (1) of this Decision to the organizational unit competent for banking affairs in the main unit or branch of the Central Bank where the bank's EUR reserve account is held (hereinafter: organizational unit for banking). (2) The submission of the request referred to in Article 2, paragraph (1) of this Decision and its confirmation by the organizational unit for banking is carried out via the software platform of the electronic interbank money market (hereinafter: EMTN). (3) In the event of inability to communicate via EMTN (EMTN system failure or in exceptional circumstances with a justified written request from the bank when it does not concern an EMTN system failure), communication with the organizational unit for banking is carried out via fax or email. In such cases, requests must be signed by authorized persons of the bank. (4) The Central Bank processes only properly completed and timely submitted bank requests, submitted and confirmed in accordance with this Decision.

Article 4. (Deposit of Funds to an Account Abroad) (1) When the increase of funds in the EUR reserve account is performed by depositing funds to the Central Bank's account abroad, the Central Bank creates an EUR payment order with a value date up to two working days from the date of receipt of the bank's request referred to in Article 2, paragraph (1), point a) of this Decision, which the bank is obliged to submit to the organizational unit for banking. (2) If it concerns a T+0 request, the bank is obliged to submit such request no later than 14:00 hours; otherwise, the request is considered late and rejected. (3) The Central Bank confirms the properly completed and timely submitted bank request, and the bank must submit a SWIFT message MT202 or pacs.009 as proof of the payment order/instruction for depositing funds to the Central Bank's account abroad to the organizational unit for banking no later than 14:30 hours on the day of payment, after the request has been confirmed. (4) The Central Bank executes the EUR payment order to the bank's EUR reserve account on the date on which the bank's deposit to the Central Bank's account abroad is confirmed. If the deposit to the Central Bank's account abroad is not executed by 16:00 hours on the same day, the execution of the EUR payment order to the bank's EUR reserve account will be on the next working day with the agreed value date, provided the funds are recorded on the next day in the statement of the Central Bank's account abroad, of which the bank will be notified in a timely manner. Execution of the payment order with a value date of the next working day will occur if funds are approved on DB-CI (Deutsche Bank Cash Inquiry) or DB-DI (Deutsche Bank Direct Internet) or on an account with another foreign bank where the Central Bank has an open account no later than 13:00 hours on the next working day, applying the T+1 rule, of which the bank will be notified in writing. (5) If the deposit to the Central Bank's account abroad is not executed in accordance with paragraph (4) of this Article, it will be considered that the bank has withdrawn from the agreed transaction, of which the bank will be notified in writing, and the Central Bank will, within a reasonable time, return the funds in accordance with the bank's instructions. (6) The execution of the payment order approves the EUR reserve account.

Article 5. (Withdrawal of Funds from an Account Abroad) (1) When the decrease of funds in the EUR reserve account is performed by withdrawal in EUR currency to the bank's account abroad, the Central Bank creates an EUR payment order with a value date of two working days from the date of submission of the request (T+2), blocks funds in the bank's reserve account until the moment of execution, and confirms the bank's request referred to in Article 2, paragraph (1), point a) of this Decision. (2) The bank is obliged to submit the request referred to in paragraph (1) of this Article to the organizational unit for banking no later than 13:30 hours. (3) If the bank submits the request referred to in paragraph (1) of this Article to the Central Bank after 13:30 hours, but no later than 14:30 hours, such a request may be approved. (4) If the request referred to in paragraph (1) of this Article is submitted after 13:30 hours, or if the request referred to in paragraph (3) of this Article is submitted after 14:30 hours, the request will be rejected. (5) The Central Bank, in exceptional cases, based on the bank's request, may approve and execute a withdrawal in EUR currency to the bank's account abroad with a value date of one working day (T+1) or with a value date of the same working day (T+0), if capabilities allow. (6) The bank is obliged to submit the request referred to in paragraph (5) of this Article to the Central Bank no later than 11:00 hours for a request with a value date of the same working day (T+0), and no later than 13:00 hours for a request with a value date of one working day (T+1). (7) If a request with a value date (T+0) is submitted after 11:00 hours, or a request with a value date (T+1) after 13:00 hours, it will be rejected. (8) The execution of the EUR payment order debits the EUR reserve account.

Article 6. (Transfer of Funds from KM Reserve Account to EUR Reserve Account) (1) When the increase of funds in the EUR reserve account is performed by transferring funds from the KM reserve account based on the bank's request referred to in Article 2, paragraph (1), point b) of this Decision, the organizational unit for banking to which the bank's request is submitted creates an internal clearing note for the purchase of KM – EUR reserve account (hereinafter: internal clearing note for the purchase of KM) and confirms the request. (2) The internal clearing note for the purchase of KM is created with a value date of the same day as the request is submitted, provided the bank submits the request by 14:00 hours. If the request is submitted after 14:00 hours, it will be rejected. (3) When the bank submits the request referred to in paragraph (1) of this Article with a value date of one working day from the date of submission of the request, the organizational unit for banking creates an internal clearing note for the purchase of KM with the date indicated in the bank's request. In this case, the bank submits the request by 15:00 hours. If the request is submitted after 15:00 hours, it will be rejected. (4) By creating the internal clearing note for the purchase of KM referred to in paragraphs (2) and (3) of this Article, funds in the KM reserve account are blocked until the moment of execution. (5) By the execution of the internal clearing note for the purchase of KM, for the purpose of transferring funds from the KM reserve account to the EUR reserve account, with the same value date, the KM reserve account is debited and the EUR reserve account is simultaneously approved. (6) Since the internal clearing note for the purchase of KM executed for the purpose of increasing funds in the EUR reserve account does not result in a change in the balance of the Central Bank's account abroad, it is not necessary to create payment orders, or SWIFT messages MT 202.

Article 7. (Transfer of Funds from EUR Reserve Account to KM Reserve Account) (1) When the decrease of funds in the EUR reserve account is performed by transferring funds to the KM reserve account based on the bank's request referred to in Article 2, paragraph (1), point b) of this Decision, the organizational unit for banking to which the bank's request is submitted creates an internal clearing note for the sale of KM – EUR reserve account (hereinafter: internal clearing note for the sale of KM) and confirms the request. (2) The internal clearing note for the sale of KM is created with a value date of the same day as the request is submitted, provided the bank submits the request by 14:00 hours. If the request is submitted after 14:00 hours, it will be rejected. (3) When the bank submits the request referred to in paragraph (1) of this Article with a value date of one working day from the date of submission of the request, the organizational unit for banking creates an internal clearing note for the sale of KM with the date indicated in the bank's request. In this case, the bank submits the request by 15:00 hours. If the request is submitted after 15:00 hours, it will be rejected. (4) By creating the internal clearing note for the sale of KM referred to in paragraphs (2) and (3) of this Article, funds in the EUR reserve account are blocked until the moment of execution. (5) By the execution of the internal clearing note for the sale of KM, for the purpose of transferring funds from the EUR reserve account to the KM reserve account, with the same value date, the EUR reserve account is debited and the KM reserve account is simultaneously approved. (6) Since the internal clearing note for the sale of KM executed for the purpose of decreasing funds in the EUR reserve account does not result in a change in the balance of the Central Bank's account abroad, it is not necessary to create payment orders, or SWIFT messages MT 202 or pacs.009.

Article 8. (Fee) (1) The Central Bank calculates fees in accordance with the regulation on the tariff of fees of the Central Bank, which is automatically delivered to the bank via EMTN (upon confirmation of the request). (2) The collection of the fee referred to in paragraph (1) of this Article is performed on a monthly basis by debiting the bank's KM reserve account in favor of the Central Office of the Central Bank.

Article 9. (Central Bank's Account Abroad) In the event of unavailability or inability to conduct transactions via the Central Bank's account referred to in Article 4 of this Decision opened at Deutsche Bank, the Central Bank will notify banks in writing about another Central Bank account with all necessary payment instructions, and will monitor and verify the status of the transaction via another communication channel.

Article 10. (Entry into Force and Publication) (1) This Decision enters into force on the eighth day from the date of publication in the "Official Gazette of BiH", and is applied from January 1, 2024. (2) This Decision will also be published in the "Official Gazette of the Federation of BiH", the "Official Gazette of the Republika Srpska", and the "Official Gazette of the Brčko District of BiH".

Chairman of the Governing Board of the Central Bank Number: UV-122-02-1-1499-5/23 of Bosnia and Herzegovina Sarajevo, August 29, 2023

GOVERNOR

dr. Senad Softić