scholarly journals Currency Board Policy and Economic Development of Bosnia and Herzegovina in the Context of European integration

2018 ◽  
Vol 15 (27) ◽  
Author(s):  
Željko Marić
Keyword(s):  
Monetary Policy ◽  
Economic Development ◽  
European Integration ◽  
Bosnia And Herzegovina ◽  
Open Economy ◽  
Domestic Currency ◽  
Currency Board ◽  
Negative Consequences ◽  
Deductive Method ◽  
Discretionary Monetary Policy

Bosnia and Herzegovina is a small and open economy in transition with great distrust in local authorities and institutions. The country applies a currency board as the only acceptable and optimal exchange rate system in order to protect its monetary policy from political influences. The strict rules of the currency board provide monetary stability and confidence in the domestic currency, but disable the pursuit of discretionary monetary policy and limit autonomous fiscal policy for the purpose of stimulating an investment cycle and economic development without coordinated accompanying support of monetary policy.The subject of this paper is an analysis of the short-term and long-term effects of the currency board application in Bosnia and Herzegovina in conditions of increasing liberalization through the process of European integration. Given the negative consequences and limitations of the currency board system, this paper analyses in particular the possibility of introducing a central bank with discretionary monetary policy instruments, as well as other measures that can influence the overvaluation of the domestic currency exchange rate.The scientific methods used in the paper are: inductive-deductive method, descriptive method and statistical method. The conclusion and recommendations areobtained by using inductive-deductive method and descriptions of current economictrends based on numerous secondary statistical data presented in the tables andcharts.

scholarly journals Business cycle synchronization and monetary policy in Bosnia and Herzegovina

Bankarstvo ◽  
2021 ◽  
Vol 50 (2) ◽  
pp. 8-20
Author(s):  
Dragan Jović
Keyword(s):  
Monetary Policy ◽  
Business Cycle ◽  
Central Bank ◽  
Bosnia And Herzegovina ◽  
Great Part ◽  
Currency Board ◽  
The Business Cycle ◽  
Further Development ◽  
Discretionary Monetary Policy ◽  
New Instruments

By adopting the currency board at the end of the last century, and by pegging its exchange rate to the Euro, a quarter of a century ago, Bosnia and Herzegovina surrendered a great part of its monetary policy in the hand of European Central Bank in the hope that the synchronization of the business cycle will make foreign monetary policy completely suitable for Bosnia and Herzegovina. At the same time during these two decades, the Central Bank of Bosnia and Herzegovina has been developing and using reserve requirement and remuneration as discretionary instruments of monetary policy. The research shows that the domestic business cycle and the foreign one are relatively weakly synchronized compared to other countries' degree of synchronization, and by this findings current discretionary monetary policy and its further development and enrichment with new instruments is fully justified. Bosnia and Herzegovina must continue with developing its own discretionary monetary policy without relying on foreign monetary policy.

scholarly journals Могући правци развоја монетарне политике БиХ у циљу подстицања економског раста // Possible tendencies of BiH monetary policy in encouraging the economic growth

2014 ◽  
Vol 12 (20) ◽  
pp. 213
Author(s):  
Бранка Топић-Павковић
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Central Bank ◽  
Bosnia And Herzegovina ◽  
Open Economy ◽  
Current Account Balance ◽  
Currency Board ◽  
Policy Model ◽  
Currency Boards ◽  
And Control

Резиме: Осигурати раст националне економије, уз истовремену унутрашњу и спољну стабилност цијена, поставља се као примарни задатак економске политике. Избор валутног одбора као модела управљања монетарном политиком обезбјеђује раст повјерења у домаћу валуту, макроекономску стабилност и јачање кредибилитета централне банке, посебно у земљама транзиционих и реформских процеса. Полазећи од ограничења овог модела монетарне политике, питања домаће конкурентности и контроле биланса текућег рачуна постају све битнија. У условима немогућности интервенције монетарне политике штетне посљедице на извоз и економски раст земље несумњиво показују да класични монетарни одбор представља погодно средство монетарне стабилизације, али не и механизам динамизирања привредног раста. Рад се фокусира на избор облика монетарне политике која би у датим условима могла да обезбиједи највећи допринос расту и привредном опоравку. Циљ рада је указати на могуће модификације постојећег система монетарног одбора у Босни и Херцеговини, анализом савремених валутних одбора и искустава земаља чланица које су примјењивале овај режим прије приступања Европској (монетарној) унији. Резултати истраживања потврђују низ предности које монетарни одбор пружа малим и отвореним економијама, али истичу и недостатке који доводе у питање одрживост овог аранжмана монетарне политике и воде модификацији постојећег модела валутног одбора, што би проширило дјеловање Централне банке Босне и Херцеговине.Summary: To ensure the growth of the national economy with simultaneous internal and external price stability is set as the primary goal of economic policy. Choosing the currency board as a model of monetary policy provides increased confidence in the local currency, macroeconomic stability and strength of the central bank credibility, especially in development countries. Considering the constraints of the currency board, national competitiveness and control of the current account balance are becoming very significant questions. In terms of the inability of monetary policy interventions to effect on exports and economic growth of the country, undoubtedly show that classical monetary board is a convenient measure of monetary stabilization but not the mechanism of intensification of economic growth. This paper focuses on the choice of monetary policy model to the given conditions which could provide the growth and economic recovery. The aim of this paper is to emphasize the possible modification of the existing system of currency board in Bosnia and Herzegovina, by analyzing modern currency boards and experiences of member states that have followed this regime before accession to the European (Monetary) Union. The results confirmed a number of benefits that monetary board provides for a small and open economy, but also point out the shortcomings that stress questions about the sustainability of this arrangement and possible tendencies of modification of existing model of the currency board, primarily with widening the instruments and action of the Central Bank of Bosnia and Herzegovina.

scholarly journals The Political Economy of Currency Boards: Case of Bosnia and Herzegovina

2010 ◽  
Vol 5 (2) ◽  
pp. 7-20 ◽  
Author(s):  
Shirley Gedeon
Keyword(s):  
Political Economy ◽  
Monetary Policy ◽  
Exchange Rate ◽  
Bosnia And Herzegovina ◽  
Financial Stability ◽  
Global Financial Crisis ◽  
Central Banking ◽  
The Political ◽  
Currency Board ◽  
Currency Boards

The Political Economy of Currency Boards: Case of Bosnia and HerzegovinaCurrency Board Arrangements (CBAs) operate in several post-socialist European economies as an alternative to traditional central banking. The CBA literature primarily focuses on the discipline of the fixed exchange rate, suggesting that the gain of reduced exchange rate volatility and monetary stability outweigh the loss of independent monetary policy. It does not address the role and impact of foreign ownership of the banking system on currency board dynamics. Through a case study of the CBA in Bosnia and Herzegovina over a ten-year period, including the global financial crisis of 2008-09, this paper suggests that monetary policy is not abandoned; it is decentralized and privatized and critical to the maintenance of financial stability of the CBA.

On Practical Validity of Quantity Theory of Money, or How Much the Dogmatism of Monetary Authorities Costs

2008 ◽  
pp. 31-45 ◽  
Author(s):  
S. Glazyev
Keyword(s):  
Monetary Policy ◽  
Economic Development ◽  
Money Supply ◽  
Market Equilibrium ◽  
Static State ◽  
Quantity Theory ◽  
Monetary Authorities ◽  
State Of The Economy ◽  
Market Organization

The article critically considers basic postulates of quantity theory of money. It shows that they reflect the static state of the economy in abstract models of market equilibrium but do not prove true in actual economic processes. In contrast to monetarists’ view, prices can rise as well as fall even if other variables of the monetarist equation are stable. Thus it cannot be used for grounding monetary policy. The author comes to the conclusion on the dogmatism of Russian monetary authorities that seriously hinders the country’s economic development. He proposes to switch to market organization of money supply basing on regulation of the refinancing rate.

Credit Restriction or Economic Growth?

2019 ◽  
pp. 45-54
Author(s):  
E.Y. Sokolova ◽  
A.S. Tanasova
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Domestic Demand ◽  
Retirement Age ◽  
Inflation Expectations ◽  
Negative Consequences ◽  
Credit Restriction

At the end of 2018 — the very beginning of 2019 Russia faced negative consequences of the economic measures that took place in 2018, such as the retirement age rising, tightening sanctions against Russia, VAT rising which caused increased inflation expectations of people. The Bank of Russia increased the key rate in response. All these measures lead to decrease of domestic demand, and not stimulate economic growth. The article examines the possibility of using the monetary policy method of credit restriction to fulfil the presidential act to stimulate economic growth.

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