Chapter X: Miscellaneous Provisions of the Central Bank Law

CHAPTER X Miscellaneous Provisions

Article 65. Consultations on Legislative Proposals The Board of Directors of the Central Bank shall consult on all legislative proposals related to any matters concerning its operations or falling within its jurisdiction before they are submitted to the legislative bodies of Bosnia and Herzegovina, the Federation of Bosnia and Herzegovina, and the Republika Srpska.

Article 66. Right of Priority of the Central Bank

1. The Central Bank has an absolute right of priority to satisfy any of its claims from any claim balance and other assets it holds in its account or in the account of the relevant debtor, whether as collateral security to secure its claims or when such a claim becomes due and payable, except for assets held by the Central Bank as mandatory reserves.
2. The Central Bank may exercise its right of priority only if it has a claim balance or sells other assets at a reasonable price, paying itself from the proceeds generated by that sale after deducting costs incurred by the sale. To exercise its right of priority in accordance with the provisions of this Article, the Central Bank does not need to initiate court proceedings. No other competing claim shall delay the fulfillment of this right, not even a claim of ownership or other prior rights, unless there is clear and convincing evidence that the staff of the Central Bank knew, or should have known, that at the time the asset came into the ownership of the Central Bank, it was not the property of the debtor in question.

Article 67. Prohibited Activities of the Central Bank

1. Unless otherwise provided by this Law, the Central Bank shall not: a. grant any credit under any circumstances; b. hold deposits expressed or payable in the currency of Bosnia and Herzegovina or of a resident of Bosnia and Herzegovina, nor give monetary or financial gifts; c. engage in trade, purchase shares of any corporation or company, including shares of any financial institution, nor have any ownership interest in a financial, commercial, agricultural, industrial, or other enterprise; d. acquire by purchase, lease, or in any other way rights to real estate, unless it considers it necessary and essential for providing premises for its own administration and business or for housing its officials, or for similar needs related to the performance of its functions in accordance with the provisions of this Law.
2. Taking into account all provisions of this Law, the Central Bank may: a. with the approval of the Presidency of Bosnia and Herzegovina, hold shares in ownership or otherwise participate in any organization involved in activities necessary for the valid execution of the functions and responsibilities of the Central Bank itself; b. acquire interests or rights during the settlement of debts as mentioned in paragraph 1 above, provided that such acquired interests and rights are sold at the first favorable opportunity; c. establish pension funds for officials or similar arrangements for the benefit or protection of its officials and persons dependent on them or designated by them, to pay contributions for costs related to these arrangements under conditions it shall determine.

Article 68. Collection of Statistical Data

1. The Central Bank directly or through its main units collects statistical data from the competent institutions of Bosnia and Herzegovina, the Federation of Bosnia and Herzegovina, and the Republika Srpska, on economic and financial matters, provided that the relevant competent authorities do not consider such data confidential. For this purpose, it shall cooperate with the competent institutions of other states and with international organizations.
2. The Central Bank contributes to the harmonization of rules and practices for the collection, compilation, and distribution of statistical data within its jurisdiction.
3. The Board of Directors of the Central Bank prescribes which statistical data are necessary, on which forms they are submitted to the Central Bank, which persons submit such data to the Central Bank, as well as the confidentiality regime to be applied when submitting data to the Central Bank.

Article 69. Immunity of the Central Bank from Taxation The Central Bank, its assets, property, and income, as well as its business and transactions, are exempt from all taxes and duties.

Article 70. Regulations of the Central Bank In the execution of its duties, the Central Bank independently issues regulations. All regulations, guidelines, and instructions issued by the Central Bank that relate to multiple institutions are published in the official gazettes of Bosnia and Herzegovina, the Federation of Bosnia and Herzegovina, and the Republika Srpska, and enter into force on the day of publication or later if so indicated by the regulations, guidelines, and instructions. Such regulations, guidelines, and instructions have the force of law throughout the territory of Bosnia and Herzegovina. The Central Bank maintains a public register of these regulations, guidelines, and instructions.

Article 71. Standards of Good Administration

1. The Central Bank uses the powers prescribed to it by this Law fairly and uniformly and in accordance with sound administrative practice. It shall refrain from using these powers for purposes other than those for which they were granted or from using them more than necessary to achieve the objectives for which the power was granted.
2. Decisions of the Central Bank under this Law are impartial and motivated only by objective and rational reasons; they are implemented fairly and with proportionality.

Article 72. Transitional Arrangements

1. Forty-five days after the entry into force of this Law, the National Bank of Bosnia and Herzegovina and the National Bank of the Republika Srpska cease to operate as central banks. In particular, they cease to accept monetary obligations or otherwise engage in monetary operations. Other institutions that at that time were engaged in monetary operations or otherwise involved in such operations cease to perform the same.
2. The Board of Directors of the Central Bank has full responsibility and authority for implementing the transitional arrangements as defined by this Law. In particular, during the period of forty-five days after the entry into force of this Law, the Board of Directors shall undertake the following activities: a. The monetary liability of the National Bank of Bosnia and Herzegovina is transferred to a trust account of the Central Bank together with and only up to the level of available, liquid, convertible foreign assets held by the National Bank of Bosnia and Herzegovina. Such transferred liabilities include and may be limited to the remaining banknotes of Bosnian-Herzegovinian dinars and deposits of mandatory reserves of commercial banks. Foreign assets acquired in this manner may be transferred to ordinary accounts of the Central Bank whenever the Central Bank converts the corresponding liability into Convertible Marks up to the amount of such converted liability, in accordance with the rules and regulations adopted by the Board of Directors of the Central Bank for this purpose.

Any net assets remaining in the trust account after the conversion of all such liabilities shall be used to liquidate the remaining liabilities of the National Bank of Bosnia and Herzegovina; b. the central office of the Central Bank and its main units begin operations; and c. a new comprehensive accounting system is established for the Central Bank, in accordance with Article 61 of this Law. Every month, a general balance sheet of all accounts and a provisional balance sheet are prepared for internal use.

Article 73. Trust Accounts The Central Bank is authorized to open and maintain in its books accounts whose assets and liabilities are separate from the other assets and liabilities of the Central Bank, so that the assets from each of such accounts can be used only to satisfy the liability of that account, and no other assets of the Central Bank shall be used to satisfy the amount of the liability of that specific account.

Article 74. Definitions The terms used in this Law have the following meanings: a. "credit" is any direct or indirect obligation to pay a sum of money in exchange for the right to repayment of the paid and unpaid sum, as well as the payment of interest and other costs on that amount, any extension of the debt maturity, any issued guarantee for the payment of debt, and any acquisition of the right to payment of a sum of money, as well as any deposit at a resident bank or financial institution; the term "credit" shall not include deposits and withdrawals from bank deposits held by resident banks for mandatory reserves, as well as the governments of Bosnia and Herzegovina, the Federation of Bosnia and Herzegovina, or the Republika Srpska to the extent that the Central Bank acts as a banker or fiscal agent. This includes purchases, on the secondary market, of debt securities issued by resident or non-resident persons who are directly or indirectly owned by residents; b. "security" is any negotiable instrument of indebtedness and any other instrument equal to the aforementioned instrument of indebtedness, whether certified or book-entry; c. "public agency" means any agency or institution of Bosnia and Herzegovina, the Federation of Bosnia and Herzegovina, or the Republika Srpska; the government level – of Bosnia and Herzegovina and the Entities – to which such agencies belong is specifically defined in each reference of this Law; d. "resident" is any natural person registered as a resident of Bosnia and Herzegovina and any legal entity that has an office in Bosnia and Herzegovina; e. "currency of Bosnia and Herzegovina" means the Convertible Mark; f. "international accounting standards" refers to the most current international accounting standards issued by the International Accounting Standards Board; g. "bank" means any legal entity that participates in the business of receiving monetary deposits and other payable funds based on a banking license issued by the competent authority responsible for licensing and supervising banks; h. "currency board", in the sense of this Law, means an operational rule for issuing domestic currency, according to which domestic currency is issued only upon purchase of convertible foreign currency with full coverage in net foreign assets. This means that the Central Bank cannot grant credit; i. "main unit" and "branch" are used in this Law as standard terms, without preventing the adoption of a different official name for organizational units of the Central Bank. The main unit in the Republika Srpska shall be called: Main Bank of the Republika Srpska of the Central Bank of BiH All letters in this name shall be of the same size and format; j. "Coupon" is a temporary banknote issued by the Central Bank until a permanent solution for the design of Convertible Mark banknotes is found. The provisions of this Law relating to banknotes (banknotes) also apply to the Coupon.

Article 75. Repeal of Previous Legal Provisions The provisions of this Law repeal the provisions of other laws and regulations relating to this matter in Bosnia and Herzegovina, the Federation of Bosnia and Herzegovina, and the Republika Srpska.

Article 76. Entry into Force This Law enters into force on the eighth day after its adoption by the Parliamentary Assembly of Bosnia and Herzegovina.

Chairman of the House of Peoples Chairman of the House of Representatives Parliamentary Assembly of BiH Parliamentary Assembly of BiH Momir Tošić, s.r. Ivo Lozančić, s.r.

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Note: This Law was published in the "Official Gazette of BiH", No. 1/97, and entered into force on 20.06.1997.