Softic participated at the Traditional Meeting of the Governors and Bankers of the Region

In Rovinj, Republic of Croatia, on 10 and 11 June 2021, now traditional meeting of the Governors and bankers of the Region was held. The main subjects of two-day meeting (10 and 11 June) are 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, Ph.D. participated actively in the Panel „Post COVID syndrome in the economy and financial system“, together with Governors of Central Bank of Slovenia, Croatia, North Macedonia and Montenegro.

In his speech, Governor Central Bank of Bosnia and Herzegovina (CBBH) Senad Softić, Ph.D. stressed the importance of structural reforms for insuring the long-term economy growth on sound basis. Following the decline of GDP of 2020, due to COVID, a growth is expected in 2021. The latest projection of GDP growth in euro area 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 economic and financial system in order to ensure higher and sustainable economic growth.

As other Governors, Mr. Softić said that the CBBH was carefully watching the global price growth trends. For BH economy, it is particularly important to watch the price growth in euro area, 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 the coping with current crisis.

Governor also emphasized the consequences of several year 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 policy has negative consequences on the 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 requirement for commercial banks of BH.