Law on Amendments to the Law on the Central Bank of Bosnia and Herzegovina

Law on Amendments to the Law on the Central Bank of Bosnia and Herzegovina PUBLISHED IN: ("Official Gazette of BiH", 76/06) LAW ON AMENDMENTS TO THE LAW ON THE CENTRAL BANK OF BOSNIA AND HERZEGOVINA

Article 1. In 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 and 9/05), in Article 20, paragraph 1, the word "three" is replaced by the word "four".

Article 2. Article 36, paragraph 1 is amended and reads: "1. The minimum amount charged on deposits and borrowed funds, regardless of the currency in which the funds are denominated, which banks are required to hold at the Central Bank, through the headquarters or main units, is determined by the Regulation of the Board of Governors of the Central Bank. Mandatory reserves apply equally to all banks."

Article 3. Article 64, paragraph 2 is amended and reads: "2. The Central Bank shall prepare and submit to the Presidency of Bosnia and Herzegovina a preliminary (unaudited) financial report for that quarter in the shortest possible time, but in any case within one month after the end of the quarter."

Article 4. This Law shall enter into force on the day following its publication in the "Official Gazette of BiH", and shall also be published in the official gazettes of the Entities and the Brčko District of Bosnia and Herzegovina.

Explanation I. BASIS FOR ENACTMENT The basis for the amendments to the Law on the Central Bank of Bosnia and Herzegovina is contained in Article 3, paragraph 1, point d), in conjunction with Article IV, paragraph 4, point a) of the Constitution of Bosnia and Herzegovina, according to which monetary policy is defined, adopted, and controlled through the Central Bank of Bosnia and Herzegovina, and the Parliamentary Assembly of Bosnia and Herzegovina is authorized to exercise the competencies established by the Constitution of Bosnia and Herzegovina through the enactment of laws.

II. REASONS FOR ENACTMENT Taking into account practical reasons, essentially minor but significant amendments to the Law on the Central Bank of Bosnia and Herzegovina for the operation of the Central Bank of Bosnia and Herzegovina are proposed. The amendments are proposed in Article 20, paragraph 1, Article 36, paragraph 1, and Article 64, paragraph 2 of the Law, as follows:

• In Article 20, paragraph 1, the appointment of the Chief Internal Auditor is proposed for a period of four years, instead of three years. Namely, the acts of the Central Bank of Bosnia and Herzegovina prescribe that appointed persons (vice governors and deputies of the Chief Internal Auditor) are appointed for a period of four years, so the proposed amendment to the Law aims to harmonize the appointment period of the Chief Internal Auditor.

• In Article 36, paragraph 1, the deletion of the prescribed level of mandatory reserves, which was established at an amount up to 20%, is proposed. Namely, for practical reasons, the limitation of the minimum amount of mandatory reserves should not be established by the Law on the Central Bank of Bosnia and Herzegovina, but rather left to the Board of Governors of the Central Bank of Bosnia and Herzegovina, as the bearer of regulating monetary policy, to determine, by its regulation, the mandatory reserve rate, especially in the light of permanent credit growth.

In Article 64, paragraph 2, an amendment to the deadline for submitting quarterly financial reports to the Presidency of Bosnia and Herzegovina is proposed, since it is not possible to obtain all necessary documentation and perform the relevant registrations necessary for the preparation of these reports within the prescribed deadline. Therefore, in the previous period, quarterly financial reports were submitted to the Presidency of Bosnia and Herzegovina within one month after the end of the previous quarter, as is proposed by this amendment.