PL EN


2010 | 5 | 2 | 7-20
Article title

The Political Economy of Currency Boards: Case of Bosnia and Herzegovina

Authors
Title variants
Languages of publication
EN
Abstracts
EN
Currency Board Arrangements (CBAs) operate in several post-socialist European economies as an alternative to traditional central banking. The CBA literature primarily focuses on the discipline of the fixed exchange rate, suggesting that the gain of reduced exchange rate volatility and monetary stability outweigh the loss of independent monetary policy. It does not address the role and impact of foreign ownership of the banking system on currency board dynamics. Through a case study of the CBA in Bosnia and Herzegovina over a ten-year period, including the global financial crisis of 2008-09, this paper suggests that monetary policy is not abandoned; it is decentralized and privatized and critical to the maintenance of financial stability of the CBA.
Publisher
Year
Volume
5
Issue
2
Pages
7-20
Physical description
Dates
published
2010-11-01
online
2011-06-03
Contributors
  • Department of Economics, University of Vermont
References
  • Aristovnik, A. "How Sustainable are Current Account Deficits in Selected Transition Economies?" Journal of Economics, 1/55, 2007. 19-39
  • Arvai, Z., Driessen, K., and Otker-Robe, I. "Regional Financial Interlinkages and Financial Contagion Within Europe." IMF Working Paper 09/6. January 2009.
  • Aydin, B. "Banking Structure and Credit Growth in Central and Eastern European Countries." IMF Working Paper 08/215. Washington, D.C.: IMF. 2008
  • Backe, P. and Walko, Z. "Bank Intermediation in Southeastern Europe: Depth and Structure." Focus on European Economic Integration Vol. 2.
  • Vienna: Austrian Central Bank, Foreign Research Division, 2006.48 - 68.
  • Balino, T., Enoch, C., Ize, A., Santiprabhob, V., and Stella, P. "Currency Board Arrangements: Issues and Experiences." IMF Occasional Paper no. 151, Washington, D.C., August 1997.
  • Banking Agency of the Federation of Bosnia and Herzegovina (FBA) Information on the Banking System of the Federation of Bosnia and Herzegovina as of December 31st, 2008. Sarajevo, 2009a.
  • Banking Agency of the Federation of Bosnia and Herzegovina (FBA) Information on the Banking System of the Federation of Bosnia and Herzegovina as of September 30th, 2009. Sarajevo 2009b.
  • Berensmann, K. "Monetary Policy Under Currency Board Arrangements: A Necessary Flexibility for Transition Countries?" In Kovacevic, D., ed., Modern-Day European Currency Boards: Practice and Prospects. Sarajevo: Central Bank of Bosnia and Herzegovina, 2004.
  • Brixiova, Z., Vartia, L., and Worgotter, A. "Capital Inflows, Household Debt and the Boom-Bust Cycle in Estonia." OECD Working Paper ECO/WK, (41) 2009.
  • Causevic, F. "Globalna Recesija I Njene Refleksije na Bosnu I Hercegovinu." Forum Bosnae (47) 2009. 61 -81.
  • Central Bank of Bosnia and Herzegovina (CBBH) Annual Report, Sarajevo, 2008a
  • Central Bank of Bosnia and HErzegovina (CBBH), Bulletin, no. 3, Sarajevo, 2009a
  • Central Bank of Bosnia and HErzegovina (CBBH), Bulletin, no. 4, Sarajevo, 2009b
  • Central Bank of Bosnia and HErzegovina (CBBH), Bulletin, no. 4, Sarajevo, 2008b
  • Cirasino, M. and Hollanders, M. "General Principles for International Remittance Systems" World Bank. CPSS-WB Conference, Washington. May 2006.
  • Chang, R. and Velasco, A. "Liquidity Crises in Emerging Markets: Theory and Policy." NBER Working Papers 7272. Washington: National Bureau of Economic Research, 1999.
  • Desquilbet, J. B. and, N. Nenovsky, "Credibility and Adjustment: Gold Standards Versus Currency Boards". Discussion Paper, no.39. Sofia: Bulgarian National Bank, 2004
  • Dobrev, D. "The Currency Board in Bulgaria: Design, Peculiarities and Management of Foreign Exchange Cover." Discussion Paper no. 9, Bulgarian National Bank, Sofia, 1999.
  • Dornbusch, R. and Giavazzi, F. "Hard Currency and Sound Credit: A Financial Agenda for Central Europe." European Investment Bank Papers, 1999, 4 (2), 25-32.
  • Edwards, S. "Exchange Rate Regimes, Capital flows and Crisis Prevention." In M. Feldstein (ed.) Economic and Financial Crises in Emerging Market Economies. Chicago: University of Chicago Press, 2003, pp. 31-78.
  • Freixas, X., Giannini, C., Hoggarth, G., and Soussa, F. "Lender of Last Resort: A Review of the Literature." In Charles Goodhart and Gerhard Illing (eds), Financial Crises, Contagion, and the Lender of Last Resort: A Reader, Oxford University Press, New York, 2002.
  • Gedeon, S. and Djonlagic, D. "Monetary Policy in Bosnia and Herzegovina Under the Currency Board Regime." Eastern European Economics, March-April 2009, 47 (2), 21-36.
  • Gedeon, S. "Money Supply Endogeneity Under a Currency Board Regime: the Case of Bosnia and Herzegovina." Journal of Post Keynesian Economics, Fall 2009, 32 (1), 97 - 114.
  • Ghosh, A.; Gulde A; Wolf, H. "Currency Boards: The Ultimate Fix?" Working Paper no. 98/8, International Monetary Fund, Washington, DC, 1998.
  • Goodfriend, M. and King, R. "Financial Deregulation, Monetary Policy, and Central Banking." Federal Reserve Bank of Richmond Economic Review, 1988, 74 (3), 3-22.
  • Hadziomeragic, A. "Bankarski Sektor u Bosni I Hercegovini: Prevladati Krizu I Doprinijeti Oporavku." Forum Bosnae (47) 2009. 186-208.
  • Hanke, S. H. and Schuler, K. Currency Boards for Developing Countries: A Handbook._ Washington, D. C.: Heritage Foundation, 1991.
  • Humphrey, T. "Lender of Last Resort: The Concept in History." Richmond Federal Reserve, Economic Review, March/April 1989.
  • International Monetary Fund. 2010. "IMF Completes First Review Under Stand-By Arrangement with Bosnia and Herzegovina, Approves 138.4 million Disbursement." Press Release No. 10/111. March 24, 2010.
  • International Monetary Fund. 2009a. "Bosnia and Herzegovina: Request for Stand-By Arrangement-Staff Report. IMF Country Report No. 09/226
  • International Monetary Fund. 2009b. "Agreement with Banks Limits Crisis in Emerging Europe." IMF Survey Magazine, October 28, 2009.
  • IMF. 2009c "European Bank Coordination Meeting on Bosnia and Herzegovina." Press Release No. 09/230. June 23, 2009.
  • International Monetary Fund. 2008. "Bosnia and Herzegovina: Selected Issues." IMF Country Report No. 08/326.
  • International Monetary Fund. 2007 "Bosnia and Herzegovina : Selected Issues." IMF Country Report No. 07/269.
  • Joksas, P. "Sterilization Activities and Lender of Last Resort in Recent Currency Board-Like Countries," Warsaw, Dec. 2004, Center for Social and Economic Research, Warsaw; #289.
  • Kaminski, B. and Ng, K. "Bosnia and Herzegovina's Surprising Export Performance: Back to the Past I a New Veil but Will it Last?" World Bank Policy Research Working Paper 5187, January 2010.
  • Kopcke, R.W. "Currency Boards: Once and Future Monetary Regimes?" New England Economic Review, May/June 1999, 21-37.
  • Kozaric, K. "Uticaj Globalne Finansijske Krize Na Bosnu I Hercegovinu." Special Research Theme STI/01/09. Central Bank of Bosnia and Herzegovina, January 2009.
  • Kraft, E. and Jankov, L. "Does Speed Kill? Lending booms and Their Consequences in Croatia." Journal of Banking and Finance (29), 2005. 105-21.
  • Lewis, M. K. "Curreny Boards and Currency Arrangements in Transition Economies." In Z. Sevic (ed) Banking Reforms in South-East Europe. Cheltenham, UK: Edward Elgar, 2002, pp. 125-146.
  • Mihaljek, D. Trade, Capital Flows, and Banking Sector Developments in Central and Eastern Europe." Conference paper: Euro 50 Group, Istanbul, 2006a.
  • Mihaljek, D. "Rapid Growth of Bank Credit in Central and Eastern Europe: the Role of Housing Markets and Foreign-Owned Banks." Conference paper: Twelfth Dubrovnik Economic Conference, Croatian National Bank, June 2006b.
  • Minea, A. and Rault, C. "Some New Insights into Currency Boards: Evidence from Bulgaria." William Davidson Institute Working Paper No. 903, Ann Arbor, January 2008.
  • Minsky, H. "The Financial Instability Hypothesis: A Restatement." In P. Arestis and T. Skouras (eds.) Post Keynesian Economic Theory: A Challenge to Neo Classical Economics. Sussex. UK: Wheatsheaf, 1985, pp. 24-55.
  • Minsky, H. Stabilizing an Unstable Economy. New Haven: Yale University Press, 1986.
  • Niksic, O. "Strukturni Razlozi Nemogucnosti Bosanskohercegovackog Odgovora." Forum Bosnae, June 2009, (47) 2009. 145-163.
  • Ostry, J.D., Ghosh, A.R., Habermeier, K., Chamon, M., Qureshi, M. S., and Reinhardt, D. B. S. "Capital Inflows: The Role of Controls." IMF Staff Position Note, SPN/10/04, February 19, 2010.
  • Poirot, C. S. "Did the Currency Board Resolve Bulgaria's Financial Crisis of 1996-97?" Journal of Post Keynesian Economics, Fall 2003, Vol 26, No. 1, pps. 27-55.
  • Ponsot, J. F. "European Experiences of Currency Boards: Estonia, Lithuania, Bulgaria, and Bosnia and Herzegovina." In M. Vernengo (ed.) Monetary Integration and Dollarization, Cheltenham, UK: Edward Elgar, 2006, pp. 28-60.
  • Schwartz, Anna. "Currency Boards: Their Past, Present and Possible Future Role."
  • Carnegie-Rochester Conference Series on Public Policy, no. 39, 1993.
  • Shelburne, R. "Current Account Deficits in Emerging Markets." United Nations Economic Commission for Europe (UNECE) Discussion Paper Series No. 2008.2 June 2008, Geneva.
  • Silajdzic, S. "The Currency Board Trap: The Case of Bosnia and Herzegovina." International Journal of Applied Econometrics and Quantitative Studies, 2005, 2 (2), 47-79.
  • Sorsa, P., Bakker, B. B., Duenwald, C., Maechler, A. M., and Tiffin, A. "Vulnerabilities in Emerging Southeastern Europe-How Much Cause for Concern?" IMF Working Paper WP/07/236, October 2007.
  • Williamson, J. What Role for Currency Boards? Washington, D.C.: Institute for International Economics, 1995.
  • Winkler, A. "Southeastern Europe: Financial Deepening, Foreign Banks and Sudden Stops in Capital Flows." Focus on European Economic Integration, Austrian Central Bank, Issue 1, 2009. 84 - 97.
  • Wolf, H. C., Ghosh, A. R., Berger, H. Gulde, A. Currency Boards in Retrospect and Prospect. Cambridge: MIT Press, 2008.
  • World Bank. "Protecting the Poor During the Global Crisis: 2009[PubMed]
  • Bosnia and Herzegovina Poverty Update." Report 51847. Dec. 18, 2009. Zettlemeyer, J. (ed.) Transition Report. London: European Bank for Reconstruction and Development (EBRD), 2009.
  • Interview of Vicegovernor CBBH Ljubisa Vladusic, in "Stimulacija banaka za dalje kreditiranje" Nezavisne Novine, October 27, 2008, p. 17.
  • Interview of Kemal Kozaric, Governor of CBBH. "Gradani iz banaka povukli 81 million KM" Dnevni Avaz, October 16, 2008
Document Type
Publication order reference
Identifiers
YADDA identifier
bwmeta1.element.doi-10_2478_v10033-010-0011-6
JavaScript is turned off in your web browser. Turn it on to take full advantage of this site, then refresh the page.