Decision on the Purchase and Sale of Physical Foreign Currency for Foreign Exchange Funds by Commercial Banks

CENTRAL BANK OF BOSNIA AND HERZEGOVINA Ref: UV-122-01-1-73/18 Sarajevo, 29.08.2018

Pursuant to Article 2, paragraph (4), item b), sub-item (I), Article 7, paragraph (1), item b), and Article 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 9th session held on 29.08.2018, adopts

DECISION on the purchase and sale of physical foreign currency for foreign exchange funds by commercial banks

Article 1. (Subject of the Decision) This Decision regulates the purchase and sale of physical foreign currency in EUR and non-EUR currencies (hereinafter: physical foreign currency) for foreign exchange funds in EUR currency (hereinafter: foreign exchange funds) conducted by the Central Bank of Bosnia and Herzegovina (hereinafter: Central Bank) with commercial banks in Bosnia and Herzegovina (hereinafter: bank).

Article 2. (Purchase and sale of physical foreign currency) (1) The Central Bank conducts the purchase and sale of physical foreign currency for foreign exchange funds based on the bank's request for the purchase/sale of physical foreign currency (hereinafter: request) for the equivalent value of foreign exchange funds. (2) For the purposes of this Decision, non-EUR currency refers to USD, CHF, and GBP currencies. (3) The purchase and sale of physical foreign currency in non-EUR currency is conducted at the purchase or sale exchange rate of the Central Bank established for non-EUR currencies on the date of the transaction.

Article 3. (Submission of request) (1) The bank submits the request to the organizational unit competent for banking affairs at the main unit or branch of the Central Bank where the bank's reserve account is maintained (hereinafter: organizational unit for banking). (2) The submission of the request referred to in paragraph (1) of this Article and its confirmation by the organizational unit for banking is conducted via the software platform of the Electronic Interbank Money Market (hereinafter: EMTN). (3) In addition to the request referred to in paragraph (1) of this Article, the bank also submits a request for the handover/pickup of physical foreign currency in accordance with the regulation on the procedure for handover/pickup of cash in the vaults of the Central Bank. (4) The request referred to in paragraph (3) of this Article for the handover/pickup of physical foreign currency in EUR currency is submitted to the organizational unit competent for vault affairs at the main unit or branch of the Central Bank, and for non-EUR currency to the Vault Department of the Central Office of the Central Bank of Bosnia and Herzegovina (hereinafter: competent vault). (5) 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 conducted via fax or e-mail. (6) In the case referred to in paragraph (5) of this Article, the conclusion on the purchase and sale of physical foreign currency (hereinafter: conclusion) must be signed by authorized persons of the bank.

Article 4. (Purchase of physical foreign currency by the Central Bank) (1) When the purchase of physical foreign currency for the equivalent value of foreign exchange funds is conducted, the competent vault, in accordance with the regulation on the procedure for handover/pickup of cash in the vaults of the Central Bank: takes over the physical foreign currency from the bank and creates documents regarding the takeover. (2) After the takeover of physical foreign currency and the creation of documents referred to in paragraph (1) of this Article, the Central Bank creates a conclusion on the purchase of physical foreign currency with a value date of two working days (T+2) and confirms the bank's request. (3) The bank is obliged to submit the request referred to in paragraph (2) of this Article to the organizational unit for banking no later than one hour before the scheduled deposit. (4) If the request referred to in paragraph (2) of this Article is submitted after the deadline specified in paragraph (3) of this Article, the Central Bank may reject such a request. (5) In exceptional cases, based on the bank's request and with prior approval from the Central Bank, the purchase of physical foreign currency may be executed with a value date shorter than two working days, i.e., with a value date of one working day (T+1). (6) The bank is obliged to state the reason for the earlier execution of this transaction when submitting the request referred to in paragraph (5) of this Article to the Central Bank, and the Central Bank may approve such a request depending on the current availability of foreign exchange reserves, the investment plan, and previously assumed obligations. (7) The Central Bank executes the conclusion on the purchase of physical foreign currency on the value date of the execution of the transaction abroad.

Article 5. (Sale of physical foreign currency by the Central Bank) (1) When the sale of physical foreign currency for the equivalent value of foreign exchange funds is conducted: The Central Bank creates a conclusion on the sale of physical foreign currency with a value date up to two working days from the date of submission of the request and confirms the bank's request. (2) The bank is obliged to submit the request referred to in paragraph (1) of this Article to the organizational unit for banking, and if it concerns a T+0 request, the bank is obliged to submit the request no later than 12:00 hours. (3) If the request (T+0) referred to in paragraph (2) of this Article is submitted after 12:00 hours, the Central Bank may reject such a request. (4) If it concerns a request with a value date of T+0, the bank is obliged to submit a SWIFT message MT202 (ACK) as proof of the order/instruction for the payment of foreign exchange funds to the account of the Central Bank abroad to the organizational unit for banking no later than 12:30 hours. (5) After the confirmed payment in the foreign exchange account, the Central Bank hands over the physical foreign currency to the bank from the competent vault in accordance with the regulation on the procedure for handover/pickup of cash in the vaults of the Central Bank and creates documents regarding the handover of physical foreign currency. (6) In the case where it concerns a request with a value date of T+0 and when the payment is not realized by the end of the working day for unforeseen reasons or if the competent vault is unable to execute the handover of physical foreign currency on the same working day, the handover will be executed on the next working day (T+1) and no later than T+2. (7) The Central Bank executes the conclusion on the sale of physical foreign currency on the day of the handover of physical foreign currency to the bank.

Article 6. (Fee) (1) The Central Bank calculates the fee, in accordance with the regulation on the tariff of fees of the Central Bank, which is automatically delivered to the bank via EMTN (confirmation of the request). (2) The collection of the fee referred to in paragraph (1) of this Article is conducted on a monthly basis by debiting the bank's reserve account in favor of the reserve account of the Central Office of the Central Bank.

Article 7. (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 01.10.2018. (2) This Decision is published in the "Official Gazette of the Federation of BiH", the "Official Gazette of the Republic of Srpska", and the "Official Gazette of the Brčko District of BiH".

Chairman of the Governing Board of the Central Bank of Bosnia and Herzegovina GOVERNOR dr. Senad Softić