CROATIAN NATIONAL BANK
PRESS RELEASE, March 16, 1998
GOVERNOR OF THE CENTRAL BANK OF BOSNIA AND HERZEGOWINA VISITS CNB
Governor of the Central Bank of Bosnia and Herzegovina, Mr. Peter Nicholl, visited on Monday the Croatian National Bank, where he met dr. Marko Škreb, governor of the CNB, Mr. Zdravko Rogić, deputy governor of the CNB, Mr. Relja Martić, vicegovernor of the CNB as well as other officials of the Croatian central bank. On this occassion, Governor Nicholl briefed CNB officials about the organization, tasks and plans of the Central Bank of Bosnia and Herzegovina, and especially about preparations for the introduction of the convertible mark as a single currency in the neighbouring country. Mr. Nicholl informed his CNB hosts about the design of the banknotes which, according to expectations, will be introduced in May.
Another subject discussed by high officials of two central banks was the possibility of cooperation between these monetary authorities, especially in view of the fact that in some parts of the neighbouring state, primarily in Herzegovina, the Croatian national currency is widely used as a legal tender. Besides, current and future economic cooperation between Croatia and Bosnia and Herzegovina requires that adequate solutions be found for the performance of payment system operations between two countries, as well as for adequate cooperation between banks. Croatian National Bank expressed its willingness to help the Central Bank of Bosnia and Herzegovina, should it be necessary and should there be enough interest for such help, with the experience it gained in the process of introducing kuna banknotes and coins, as well as in the process of establishing and organizing an independent central bank in an independent country that has a market-oriented economy.
Governor Škreb and his colleagues informed Mr. Nicholl that kuna is completely convertible for all current transactions and that foreign exchange reserves on accounts of the Croatian National Bank total about USD 2.5 billion, which means that they even somewhat exceed the money supply (M1). The amount of cash outside banks totals currently about HRK 5 billion. It has been estimated that less than ten percent of this amount are in circulation in Bosnia and Herzegovina. Therefore, even if all kuna banknotes used in the neighbouring country would be converted in the new official currency of Bosnia and Herzegovina, this would in no way endanger the convertibility of the Croatian currency, or influence significantly the international liquidity of the Croatian financial system.