Chapter II Organization and Administration of the Central Bank

CHAPTER II
Organization and Administration of the Central Bank

Article 5.
Organization of the Central Bank

1. The Central Bank shall consist of the Administrative Board, an Executive Board consisting of the Governor and three Deputy Governors, and staff.
2. The Central Bank shall have a central office and main units.

Article 6.
Functions of the Administrative Board

1. The Administrative Board is responsible for the supreme administration and control of policy implementation, administration, and business operations of the Central Bank.
2. In performing its functions, the Administrative Board must periodically assess the monetary and economic situation. For this purpose, the Executive Board of the Central Bank shall report to the Administrative Board, no less than once a month, on the administration and activities of the Central Bank, on the conduct of its monetary and regulatory policies, on the solidity of the financial system, and on the state of the money, capital, and foreign exchange markets, including all events and conditions that have, or will have, a significant effect on the management or business operations of the Central Bank, on the implementation of its policies, on the financial system, or on the aforementioned markets.

Article 7.
Powers of the Administrative Board
The Administrative Board has the following powers:
a) to determine monetary policy in accordance with Article 2, paragraph a, point 3 of this Law; b) to adopt all generally applicable regulations, guidelines, and instructions to be issued by the Central Bank; c) to approve all reports and recommendations that the Central Bank is required to submit to the Parliamentary Assembly of Bosnia and Herzegovina or the Presidency of Bosnia and Herzegovina; d) to decide on the presence of the Central Bank in international organizations; e) to determine the nominal value and size of banknotes and coins in accordance with Article 42 of this Law, to decide on their production and storage, as well as on the conditions for the recall of money. The Administrative Board shall decide on the design of banknotes and coins, with the approval of the Presidency of Bosnia and Herzegovina; f) to adopt the Statute of the Central Bank and to determine policies relating to the administration and business operations of the Central Bank; g) to determine the organization of the Central Bank; h) to approve the appointment of Deputy Governors and the Chief Controller of the Central Bank and their deputies, and, after the first six years of operation of the Central Bank, to elect the Governor of the Central Bank from among its members; i) to open and close main units and other branches and representative offices of the Central Bank; j) to determine the financial plan of the Central Bank and the general conditions of employment for officials, representatives, and correspondents of the Central Bank; k) to determine accounting practices and standards of the Central Bank, the central office, main units, and other branches, and to approve annual reports and financial statements of the Central Bank; l) to determine special reserves in the books of the Central Bank with the approval of the Presidency of Bosnia and Herzegovina; m) to determine categories of assets that would be adequate for the placement of financial funds of the Central Bank; and n) to decide on any other matter falling within the competences of the Administrative Board, as defined by this Law.

Article 8.
Constitution of the Administrative Board

1. During the first six years of operation of the Central Bank, the Administrative Board shall consist of the Governor appointed by the International Monetary Fund after prior consultations with the Presidency of Bosnia and Herzegovina, and three members appointed by the Presidency of Bosnia and Herzegovina. The Governor appointed by the International Monetary Fund shall not be a citizen of Bosnia and Herzegovina or any other neighboring state. The three members appointed by the Presidency of Bosnia and Herzegovina shall be one Bosniak and one Croat from the Federation of Bosnia and Herzegovina, and one Serb from the Republika Srpska.
2. After the first six years of operation of the Central Bank:
   a. The Administrative Board of the Central Bank shall consist of five members appointed by the Presidency of Bosnia and Herzegovina; and b. After appointing its members, the Administrative Board shall elect the Governor from among its members for a period of six years; during the term of office, the Governor shall not be replaced, unless his removal from the Administrative Board is in accordance with Article 11 of this Law.
3. Except for the Governor appointed by the International Monetary Fund, candidates for membership in the Administrative Board must be citizens of Bosnia and Herzegovina. They must be persons of high trust and professional experience in monetary and banking affairs for whom there is no ground for removal under Article 11 of this Law.
4. The term of office of each member of the Administrative Board is six years. Members of the Administrative Board may be re-elected if there is no ground for removal under Article 11 of this Law.

Article 9.
Remuneration of Members of the Administrative Board Members of the Administrative Board receive remuneration from the Central Bank, which is determined by the Governor in accordance with generally accepted standards and is proportional to their responsibilities.

Article 10.
Ineligibility for Membership in the Administrative Board A person who is a member of the Presidency, the Parliamentary Assembly, the State Council, or the Council of Ministers of Bosnia and Herzegovina, the Federation of Bosnia and Herzegovina, or the Republika Srpska, cannot be a member of the Administrative Board.

Article 11.
Disqualification and Removal of Members of the Administrative Board and Their Immunity

1. The Presidency of Bosnia and Herzegovina shall remove from the Board any member:
   a. who violates the currency board rule established by this Law; b. who is ineligible for membership in the Administrative Board in accordance with Article 10 of this Law;
   c. who has been found guilty of an offense for which he was, or could have been, sentenced to imprisonment without the possibility of a fine;
   d. who has become insolvent or bankrupt and has not been rehabilitated; or e. who has been disqualified or suspended by the competent authorities for misconduct in the performance of professional activities.
2. Upon knowledge and proposal by a majority of the members of the Administrative Board, any member of the Administrative Board may be dismissed by the Presidency of Bosnia and Herzegovina if:
   (a) the person proposed for removal from office is unable to perform the function due to physical or mental illness lasting more than one year; (b) the person proposed for removal from office attended less than half of the meetings of the Administrative Board held during the previous twelve months; or (c) the person proposed for removal from office participated in a serious violation of the Law or a serious offense at the workplace, which significantly harms the interests of the Central Bank.
3. For no other reason may a member of the Administrative Board be removed from the Board.
4. Members of the Administrative Board of the Central Bank shall not be criminally prosecuted or arrested and detained without the approval of the Parliamentary Assembly. Immunity shall not apply to the prosecution, arrest, or detention of a person caught in the act of committing a serious criminal offense.

Article 12.
Resignation of Members of the Administrative Board Members of the Administrative Board may resign, provided that they submit a written resignation to the Presidency of Bosnia and Herzegovina at least three months in advance.

Article 13.
Vacancy in the Administrative Board
Any vacancy in the Administrative Board shall be filled by the appointment of a new member of the Administrative Board in accordance with Article 8, with the proviso that his term of office shall last until the expiration of the term of the member whose place he has taken.

Article 14.
Meetings of the Administrative Board

1. The Governor shall preside over meetings of the Administrative Board, and in the event of his absence, one of the members of the Administrative Board shall preside over the meetings. During the first six years of operation of the Central Bank, the Administrative Board, with the approval of the Governor, may discuss issues and make decisions in the absence of the Governor, provided that three other members or their appointed deputies are present at the meeting, and that decisions are made unanimously.
2. The Administrative Board shall meet as often as the activities of the Central Bank require, but no less than once every calendar month.
3. As a rule, meetings of the Administrative Board are convened by the Governor. Meetings of the Administrative Board may also be convened upon written request of two members of the Administrative Board, or, in an emergency, by one member of the Administrative Board.
4. All members of the Administrative Board must be notified of the exact time, place, and agenda of the meeting at least ten working days before the scheduled meeting of the Board. In an emergency, meetings of the Administrative Board may be announced in a shorter notice period. If a member of the Board, excluding the Governor, cannot attend the meeting, he must appoint a representative who may attend the meeting, but who is not one of the members of the Board. Each of these representatives must meet the conditions set out in Article 8, point 3, and be subject to the provisions of Articles 10 and 11 of this Law.
5. Each member of the Administrative Board has one vote. However, during the first six years of operation of the Central Bank, the two members appointed from the Federation of Bosnia and Herzegovina share one vote, i.e., each has half (1/2) a vote.
6. The quorum for each meeting of the Administrative Board consists of: (i) three-quarters of the membership of the Administrative Board, or their appointed representatives, during the first six years of operation of the Central Bank and thereafter (ii) one-third of the membership of the Administrative Board or their appointed representatives.
7. Unless otherwise provided by this Law, in accordance with the discussions held on a particular issue, decisions of the Administrative Board are accepted based on the majority of votes collected from the attending members of the Administrative Board or their appointed representatives. Only members of the Administrative Board or their appointed representatives who are personally present have the right to vote, unless internal regulations of the Central Bank allow meetings of the Administrative Board and voting to be conducted via teleconference or, in special cases, via tested telex or some other verified electronic means of communication. In the event of a tied vote, the Governor may cast the deciding vote.
8. All decisions made by a person acting in good faith as a member of the Administrative Board are final, despite the fact that some irregularities in his appointment, election, or qualification may be discovered later.

Article 15.
Deliberations at Meetings of the Administrative Board

1. Deliberations of meetings of the Administrative Board are confidential. The Administrative Board may decide to disclose the results of its deliberations.
2. A record of each meeting of the Administrative Board is kept, which is signed by the chairman and the secretary of the Administrative Board.
3. The Secretary of the Administrative Board is appointed by the Governor from among the senior officials of the Central Bank; he cannot be a member of the Administrative Board.

Article 16.
Statements of Interest by Members of the Administrative Board

1. Members of the Administrative Board should periodically and fully report to the Administrative Board their significant interests that they or members of their household may have directly or indirectly; such statements should correspond to the guidelines adopted by the Administrative Board.
2. Members of the Administrative Board should, like other senior officials of the common institutions of Bosnia and Herzegovina, be subject to the same regulations concerning their significant business interests.
3. Whenever a question regarding such an interest is placed before the Administrative Board for discussion, the interested member of the Administrative Board should inform the members of his interest at the beginning of the discussion; he must not participate in the discussion and decision on that matter. However, his presence shall be counted for the purpose of achieving a quorum.

Article 17.
Composition of the Executive Board of the Central Bank

1. The Executive Board of the Central Bank consists of the Governor and Deputy Governors, whom the Governor appoints with the approval of the Administrative Board.
2. Members of the Administrative Board may be appointed as Deputy Governors only by a unanimous decision of the Administrative Board.
3. The Governor may, with the consent of the Administrative Board, assign temporary duties to other members of the Administrative Board. He may also assign long-term duties to members of the Administrative Board, if they are unanimously approved by the Administrative Board.

Article 18.
Powers of the Executive Board of the Central Bank

1. The Governor is the chief executive officer of the Central Bank responsible for the daily business operations of the Central Bank. If the Governor is absent, or is unable to perform his duties, the Deputy Governor whom he selects with the approval of the Administrative Board shall perform the duties of the chief executive officer of the Central Bank.
2. The Governor is responsible to the Administrative Board for the execution of their decisions, and for the administration and control of the administration and activities of the Central Bank.
3. All powers not specifically granted to the Administrative Board are assigned to the Governor. Within the limits of his powers, the Governor has the legal right to: take all measures required or which he himself deems advisable for the administration and business operations of the Central Bank, including entering into contracts on behalf of the Central Bank, appoint officials, intermediaries, and correspondents of the Central Bank, and represent the Central Bank in legal proceedings. The Governor may, with the approval of the Administrative Board, delegate some or all of his powers to other officials of the Central Bank.

Article 19.
Outside Employment

1. Without prior written approval of the Administrative Board of the Central Bank, the Governor, members of the Administrative Board, and Deputy Governors shall not work in another financial institution during their term of office in the Central Bank.
2. Without prior written approval of the Administrative Board of the Central Bank, former Governors, other members of the Administrative Board, and Deputy Governors shall not work in another financial institution during a period of six months, calculated immediately after leaving the Central Bank.

Article 20.
Chief Controller of the Central Bank

1. The Chief Controller of the Central Bank is appointed by the Governor with the approval of the Administrative Board for a period of three years. The Chief Controller may be reappointed if none of the reasons listed in Article 11 of this Law can be applied to him.
2. The Chief Controller may resign from his position by delivering his resignation to the Governor at least three months in advance. The Chief Controller shall be dismissed from office only by decision of the Administrative Board, if supported by one or more grounds for removal from office specified in Article 11 of this Law.
3. The duties of the Chief Controller are to:
   a. establish and maintain appropriate procedures and instruments for risk control in the Central Bank and supervise their implementation; b. conduct periodic audits of the administration and business operations of the Central Bank to ensure strict application of laws and regulations relating to the Central Bank;
   c. audit and submit reports and recommendations to the Administrative Board regarding accounts and reports, as well as budgetary and accounting procedures and controls of the Central Bank; and
   d. audit periodic financial statements and relevant documents of the Central Bank and, if properly prepared, issue certificates for this purpose.
4. The Administrative Board may appoint deputy controllers to assist the Chief Controller in performing his duties.

Article 21.
Staff of the Central Bank

1. During employment at the Central Bank, the staff of the Central Bank cannot be employed, or receive a loan, from anyone other than the Central Bank, unless the Central Bank decides otherwise.
2. The Administrative Board shall adopt regulations of the Central Bank governing the conditions of employment of officials in the Central Bank, as well as their rights and duties.

Article 22.
Officials, Intermediaries, and Correspondents of the Central Bank

1. The Governor appoints and terminates the appointment of officials, intermediaries, and correspondents of the Central Bank within the limits and in accordance with the general conditions of employment prescribed by the Administrative Board.
2. No salary, wage, or other honorarium or remuneration paid by the Central Bank may be tied to net income, net profit, or any other income of the Central Bank.

Article 23.
Conflict of Interest

1. While in office, the Governor and Deputy Governors should devote themselves fully and professionally to work at the Central Bank. Neither of them may have any other service or employment, whether paid or not, unless that activity is approved by the Administrative Board of the Central Bank.
2. No executive officer from the management structure or staff of the Central Bank may simultaneously have another employment, whether paid or not, without prior written approval of the Administrative Board of the Central Bank.
3. No member of the Administrative Board, member of the management structure, or staff of the Central Bank may accept any gift or loan for himself, or for the benefit of any person, with whom he is family, business, or financially connected, if such acceptance could lead to or give the impression of leading to a reduction in his impartiality towards his duties at the Central Bank.

Article 24.
Confidentiality
No person who is, or has been, a member of the Administrative Board, executive board, or staff, auditor of business books, representative, or correspondent of the Central Bank may, in a manner not permitted by law: (i) allow access to, present, or publish confidential information material obtained in performing his duties for the Central Bank; or (ii) use such data, or allow such data to be used for personal benefit.