Decision on the Purchase and Sale of Convertible Marks by Commercial Banks

CENTRAL BANK OF BOSNIA AND HERZEGOVINA Ref: UV-122-01-1-74/18 Sarajevo, 29.08.2018.

year Pursuant to Article 7, paragraph (1), item b), Articles 33 and 70 of the Law on the Central Bank of Bosnia and Herzegovina ("Official Gazette of BiH", 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.

year adopts DECISION on the purchase and sale of convertible marks by commercial banks

Article 1. (Subject of the Decision) This Decision regulates the purchase and sale of convertible marks (hereinafter: KM) 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 KM) (1) The Central Bank conducts the purchase and sale of KM based on the bank's request for the purchase and sale of KM (hereinafter: request), for the equivalent of foreign exchange funds in EUR currency via an account abroad, or for physical foreign currency in EUR or non-EUR currency (hereinafter: physical foreign currency) via the vaults of the Central Bank. (2) For the purposes of this Decision, non-EUR currency refers to USD, CHF, and GBP currencies. (3) The purchase and sale of KM for non-EUR currencies is conducted at the established selling or buying exchange rate of the Central Bank for non-EUR currencies on the date of the transaction.

Article 3. (Submission of Request) (1) The bank submits the request for the purchase and sale of KM to the organizational unit responsible for banking affairs at the main unit or branch of the Central Bank where the bank's reserve account is held (hereinafter: organizational unit for banking). (2) The submission of the request from 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) When the purchase and sale of KM is conducted for physical foreign currency, the bank also submits a request for the handover/takeover of physical foreign currency in accordance with the regulation on the procedure for handover/takeover of cash in the vaults of the Central Bank. (4) The request from paragraph (3) of this Article for a transaction in EUR currency is submitted by the bank to the organizational unit of the Central Bank responsible for vault affairs at the main unit or branch, and for a transaction in non-EUR currency to the Vault Department of the Central Office of the Central Bank (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 from paragraph (5) of this Article, the settlement note on the purchase and sale of KM must be signed by authorized persons of the bank.

Article 4. (Purchase of KM by the Central Bank) (1) When the purchase of KM is conducted for the equivalent of foreign exchange funds in EUR currency to the bank's account abroad, the Central Bank creates a settlement note on the purchase of KM 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 realization, and confirms the bank's request. (2) The bank is obliged to submit the request from paragraph (1) of this Article to the organizational unit for banking no later than 13:30. (3) If the bank submits the request from paragraph (1) of this Article to the Central Bank after 13:30, but no later than 14:30, the bank is obliged to indicate the reason for the delay along with the request, and the Central Bank may approve such a request depending on the current availability of foreign exchange reserves, the investment plan, and previously undertaken obligations. (4) If the request from paragraph (1) is submitted after 13:30, or if the request from paragraph (3) is submitted after 14:30 or without stating the reason for the delay, the request will be rejected. (5) In exceptional cases, based on the bank's request and with prior approval of the Central Bank, the purchase of KM can 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 indicate the reason for the earlier execution of this transaction along with the request from paragraph (5) of this Article, and the Central Bank may approve such a request depending on the current availability of foreign exchange reserves, the investment plan, and previously undertaken obligations. (7) The bank is obliged to submit the request from paragraph (5) of this Article to the Central Bank no later than 13:30. If the request is submitted after 13:30 or is submitted without stating the reason for earlier execution, the request will be rejected. (8) When the purchase of KM is conducted by handing over physical foreign currency to the bank, the Central Bank creates a settlement note on the purchase of KM and blocks funds in the bank's reserve account until the moment of realization. (9) After creating the settlement note on the purchase of KM, the Central Bank confirms the bank's request and hands over the physical foreign currency to the bank from the competent vault in accordance with the regulation on the procedure for handover/takeover of cash in the vaults of the Central Bank. (10) The Central Bank realizes the settlement note on the purchase of KM on the value date of the execution of the transaction abroad or on the day of handing over the physical foreign currency to the bank. (11) Upon realization of the settlement note on the purchase of KM, the bank's reserve account is debited.

Article 5. (Sale of KM by the Central Bank) (1) When the sale of KM is conducted by paying the equivalent of foreign exchange funds in EUR currency to the Central Bank's account abroad, the Central Bank creates a settlement note on the sale of KM 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 from 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 such request no later than 14:00. (3) If the T+0 request from paragraph (2) is submitted after 14:00, such request will be rejected. (4) The Central Bank confirms the proper request of the bank, and the bank submits a SWIFT message MT202 (ACK) as proof of the order/instruction for the payment of foreign exchange funds to the Central Bank's account abroad to the organizational unit for banking no later than 14:30. (5) When the sale of KM is conducted by taking over physical foreign currency, the Central Bank takes over the physical foreign currency from the bank in accordance with the regulation on the procedure for handover/takeover of cash in the vaults of the Central Bank, creates a settlement note on the sale of KM, and confirms the bank's request. (6) The Central Bank realizes the settlement note on the sale of KM on the date with which the bank's payment to the foreign exchange account was confirmed, or on the day of taking over the physical foreign currency. If the payment is not realized by the end of the working day for unforeseen reasons, the realization of the settlement note will be T+1, or no later than T+2, and the bank will be notified in a timely manner. (7) Upon realization of the settlement note on the sale of KM, the bank's reserve account is credited.

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 request). (2) The collection of the fee from 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", "Official Gazette of the Republic of Srpska", and "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