Accountability

Independence must be accompanied by accountability. People who have been given operational independence sometimes forget this. It should never be independence to do whatever you choose. The actions of the institution have to be consistent with its law and its statutory objectives. The statutory objective of monetary policy in BiH is clear. It is therefore easy to see if the Central Bank has met the currency board requirements set out in the law or not. We know this from hard experience as the CBBiH did breach some of these requirements in its first nine months of operation. This did damage the credibility of the CBBiH, especially in some parts of the country. It was only after the problems that had led to these breaches were solved, and were seen to be solved by everyone, that the CBBiH and its currency, the KM, began to be accepted and used throughout the whole country. The KM is now the dominant transaction- currency everywhere in the country.

Article 11.1 of the CBBiH Law says that any Board member, including the Governor, can be removed if they ‘violate the currency board rule established in this law’. This could be used to remove someone, including the Governor, who acted inconsistently with the bank’s statute. It has not been used in BiH to remove a Governor or Board member (despite the early breaches), but the existence of this rule was important in practice to remind the Board members of a possible breach of their responsibilities.