Financial Inclusion and Risk in Bosnia and Herzegovina

Overview

Bosnia and Herzegovina has made significant strides in recent years to improve its financial inclusion landscape. However, the country still faces several challenges related to risk management and regulation.

Progress Made in Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT)

According to a report by the Financial Action Task Force (FATF), Bosnia and Herzegovina has made progress in implementing AML/CFT measures. The country’s efforts include:

Establishing a national risk assessment
Implementing regulations to prevent money laundering

However, the FATF report also notes that Bosnia and Herzegovina still faces challenges related to financial inclusion, particularly in rural areas where access to financial services is limited.

The country’s banking sector remains underdeveloped, with many banks struggling to provide services to marginalized communities. To address these challenges, the government of Bosnia and Herzegovina has launched several initiatives aimed at improving financial inclusion.

Initiatives Launched by the Government

These initiatives include:

Establishing a national payment system to increase access to electronic payments for citizens and businesses
Encouraging microfinance institutions to provide services to underserved communities

Despite these efforts, Bosnia and Herzegovina still faces significant risks related to financial stability. The country’s banking sector remains vulnerable to credit risk, and the government’s debt levels are a concern.

Recommendations

To address the challenges related to financial inclusion and risk in Bosnia and Herzegovina, the following recommendations are made:

Strengthen AML/CFT Framework

Implement regulations to prevent money laundering and terrorist financing
Continue to strengthen the country’s AML/CFT framework

Improve Financial Inclusion

Launch initiatives aimed at improving financial inclusion, including the establishment of a national payment system
Encourage microfinance institutions to provide services to underserved communities

Strengthen Banking Sector

Implement measures to prevent credit risk and improve bank supervision
Strengthen the country’s banking sector

Monitor Financial Stability Risks

Continue to monitor the country’s financial stability risks, including credit risk, debt levels, and other macroeconomic factors.

By implementing these recommendations, Bosnia and Herzegovina can address the challenges related to financial inclusion and risk in the country and promote a more stable and inclusive financial system.