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SARAJEVO, June 11 (FENA) - The ninth in succession meeting of the Governors and bankers of the region was held in Rovinj, Croatia on 10 and 11 June 2021.
The main topics of a two-day meeting focused on monetary policies and financial stability in the period of pandemic and are designed as a response of the financial sector to COVID crisis.
The Governor of the Central Bank of Bosnia and Herzegovina (CBBH) Senad Softić participated actively in the Panel "Post COVID syndrome in the economy and financial system“, together with Governors of the Central Banks of Slovenia, Croatia, North Macedonia and Montenegro.
In his speech, Governor Central Bank of Bosnia and Herzegovina stressed the importance of structural reforms for ensuring long-term economic growth on a sound basis. Following the decline of GDP of 2020, due to COVID, growth is expected in 2021. The latest projection of GDP growth in the euro zone for 2021 is 4.6%, while such forecast for BH is at the level of 3.4%. The lessons from the crisis caused by the pandemic should be used for reforms in the economic and financial system in order to ensure higher and sustainable economic growth.
Agreeing with other governors, Mr. Softić said that the CBBH was carefully monitoring the global price growth trends. For the BiH economy, it is particularly important to watch the price growth in the euro zone, where the latest 2021 inflation projection is 1.9%, while inflation at the level of 0.6% is expected for BH in 2021. The inflation growth was mainly the result of stimulating measures of monetary and fiscal authorities aimed at coping with the current crisis.
The governor also emphasized the consequences of the several-year-long policy of very low and negative market interest rates in the euro area were aimed at stimulating economies suffering the consequences of pandemic. However, such a policy has negative consequences on CBBH profitability. Due to the legal restrictions, the CBBH can invest its assets, i.e. foreign currency reserves, only in the safest banks and euro area government securities, so the CBBH is mainly facing negative interest rates. By its measures, the CBBH tries to mitigate negative consequences, especially those on the decline of the CBBH profit. The measures are mainly related to the already adopted and also future changes of regulations on reserve requirements for commercial banks in BiH.
(FENA) S. R.
