Bosnia and Herzegovina’s Financial Regulatory Bodies Achieve Major Victory
European Commission Set to Confirm Equivalence of Supervisory Framework
In a significant development for Bosnia and Herzegovina, the European Commission is expected to confirm the equivalence of the country’s supervisory and regulatory framework in relation to key EU regulations by the end of this year. This decision marks a major achievement for the banking agencies of Republika Srpska and the Federation of BiH.
A Four-Year Effort towards Harmonization
The banking agencies have worked tirelessly over the past four years to harmonize Bosnia and Herzegovina’s financial regulatory framework with EU standards. The effort involved:
- Direct control exercises
- Reviews by European Banking Authority (EBA) experts
- Coordination between entity banking agencies, supported by the Ministries of Finance, Association of Banks in BiH, banks, the Central Bank of Bosnia and Herzegovina, and other stakeholders
Key Segments Under Review
The equivalence assessment process focused on key segments such as:
- Depositor protection
- Financial system stability
- Cooperation between regulators and supervisors
- Implementation of internationally agreed standards
Far-Reaching Consequences
The results of the equivalence assessment are far-reaching, providing insight into whether the degree of application of Bosnia and Herzegovina’s regulatory and supervisory framework is sufficient to ensure effects identical to those in the EU.
Benefits for Bosnia and Herzegovina
The confirmation of equivalence in the supervisory and regulatory framework will have significant long-term effects on Bosnia and Herzegovina, including:
- Potential improvements in rating assessments
- Risk weights for calculating capital requirements
- Interest rates
- Investment security
- Other aspects of the country’s economic development
A Strong Institutional Framework
The Banking Agency of Republika Srpska and the Banking Agency of the Federation of BiH have emerged from this process with a strong institutional and regulatory framework for the banking sector in Bosnia and Herzegovina. The country’s institutions are now poised to play an increasingly important role in future cooperation with relevant EU institutions, which is essential for the country’s accession process.
Commitment to Stability and Harmony
The banking agencies remain committed to maintaining the stability and harmony of the banking system, ensuring that it continues to serve the interests of citizens and the economy.