B. Constitutional Musts and the CBBiH Law

For public sector organisations, including central banks, one of the most important things that will impact the way they will be governed and perform is the statutory basis under which they operate. The need for very specific and clear laws, structures and processes is probably greater in new countries or in countries going through transition, such as BiH, than in countries with long established traditions of sound behaviour where institutions are largely trusted by citizens. A public sector agency like a central bank should therefore take a very close interest in its statute as a well-structured statute can be an immense help to the institution by giving clear guidelines for its role and operations. A good law can also protect the institution and its Governor from political criticism and interference and from public criticism. The criticisms will still come but they are easier to respond to if the behaviour or decisions of the institution are clearly consistent with its statute.

The Parliamentary Assembly was mandated to adopt a Law on the CBBiH to regulate its responsibilities. The Constitution mandated that there would be a single central bank in BiH. It also mandated that for the first six years it would operate as a strict currency board. In particular, the Constitution specified that the Central bank could not extend credit to anyone during this six-year period.³⁸⁸² The Constitution was also quite specific on the structure of the CBBiH’s Governing Board.

There were a number of important aspects to be taken into account in drafting the CBBiH Law.