Twenty-five years of monetary stability, chronically slow growth

By its own telling, the Central Bank of Bosnia and Herzegovina's currency board survived three major stress tests intact: the 2008 global financial crisis, the 2020 pandemic shock, and the economic fallout from Russia's 2022 invasion of Ukraine, in each case keeping the convertible mark fully convertible and the payments system running without the kind of disorderly devaluation that hit several regional neighbors. Governor Senad Softic's remarks marking the central bank's 25th anniversary in 2022 credited that record to a narrow but consistently executed mandate: supplying enough cash to banks and the public during each shock, keeping the payment system operating without delay, and maintaining transparent communication rather than improvising new tools outside the currency-board framework. What the mandate could not deliver was faster growth or lower unemployment, both of which remained persistently weak by regional standards through most of the postwar period, reflecting structural problems, a political system fragmented across entities, and slow progress on EU-accession-linked reforms that lay outside a currency board's reach by design. The same rigidity that delivered monetary stability also meant the central bank had no exchange-rate or interest-rate tools available to address those structural weaknesses directly, leaving that work to a fiscal and political system that moved far more slowly.