Bosnia and Herzegovina: Financial Sector Assessment Program Technical Note—Systemic Liquidity Management, Financial Safety Net, Insolvency Framework, and Macroprudential Policy
IMF Staff Country Reports, August 3, 2015
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- Bosnia and Herzegovina: Financial Sector Assessment Program Technical Note—Systemic Liquidity Management, Financial Safety Net, Insolvency Framework, and Macroprudential Policy
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Bibliographic details
- Published: August 3, 2015
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513580210.002
Summary
- This Technical Note discusses key findings and recommendations of the assessment on Systemic Liquidity Management, Financial Safety Net, Insolvency Framework, and Macroprudential Policy on Bosnia and Herzegovina.
- It is observed that there are constraints on the ability of both banks and the Central Bank of Bosnia and Herzegovina to manage liquidity.
- The system lacks a central bank liquidity window, and the secondary market for government securities is small and illiquid.
- Liquidity regulations should be streamlined and the adoption of the liquidity coverage ratio would strengthen liquidity management.
- The deposit insurance framework is a relatively well-developed paybox scheme, but further enhancements of the deposit insurance arrangements would be beneficial.
Key findings
- Constraints exist on liquidity management capacity for both banks and the Central Bank of Bosnia and Herzegovina.
- Absence of a central bank liquidity window limits systemic liquidity support options.
- The secondary market for government securities is small and illiquid, reducing market-based liquidity management tools.
- Current liquidity regulations are fragmented and would benefit from streamlining.
- Adoption of the liquidity coverage ratio is recommended to strengthen liquidity management frameworks.
- Deposit insurance operates as a paybox scheme and is relatively well-developed, though improvements are advisable.
Policy recommendations
- Establish or enable a central bank liquidity window to improve systemic liquidity management.
- Deepen and develop the secondary market for government securities to enhance market liquidity tools.
- Streamline existing liquidity regulations to reduce fragmentation and improve clarity for financial institutions.
- Adopt the liquidity coverage ratio to align liquidity management with international standards.
- Enhance deposit insurance arrangements beyond the existing paybox framework to improve depositor protection and financial safety net resilience.
Content in this bundle
- _cr15216 — Executive Summary