RAZVOJ TRŽIŠTA NOVCA U FUNKCIJI RAZVOJA FINANSIJSKOG SISTEMA
MONEY MARKET DEVELOPMENT IN THE FUNCTION OF FINANCIAL SYSTEM DEVELOPMENT

Author(s): Jasna Zrilić
Subject(s): Economy, National Economy, Financial Markets, Public Finances
Published by: Finrar d.o.o Banja Luka
Keywords: Central bank; money market; financial system;
Summary/Abstract: In addition to the previously introduced fee for funds above the reserve account, from June 1,2021, the Central Bank of BiH will also introduce a fee for required reserve funds (based on EUR and other foreign currencies). This decision will consequently increase the price of services provided by banks to clients in BiH. Banks have not planned this cost in their budgets,and since the estimated amount is significant, they will look for a way to recoup revenues.In the circumstances during and after the pandemic, central banks around the world have taken measures to encourage lending activity, e.g. by reducing the reserve requirement rate or by providing additional liquid assets that they made cheap and accessible to the economy and citizens through banks. In 2020, there was a decline in lending activity in BiH, and loans reduced by interbank loans decreased by 2.31% compared to the previous year. The country's economic recovery is possible by stimulating the growth of lending through the synchronized action of all market participants.The banking sector of BiH is stable, extremely liquid, but due to the lack of coordination and consideration of the impact of individual decisions of institutions and banks, there has been no growth in lending activity.The aim of the paper is to, through the proposal, lead the professional public to an active discussion in order to solve long-term problems related to business in the circumstances of negative interest rates on the international market. Also, given the existence of a currency board,it is necessary that the legislation treats EUR and domestic currency equally, since there is no foreign exchange risk. The money market and secondary trade in government bonds could be developed if it were possible to maintain the required reserves partly in securities issued by the Ministries of Finance of domestic entities.

• Details
• Contents