The law should specify clearly the roles of the major participants. In the case of a central bank, these participants are usually the parliament, the government, the governing board and the governor. If this is not done, there are two broad types of problems that can arise: two or more parties may claim responsibility for certain areas (i.e.<\/i>, you will get overlaps and duplication) or for some areas, particularly contentious areas, nobody may want to take responsibility (i.e.<\/i>, you will get vacuums). In both cases, disputes will arise and are likely to be won by power rather than by law.<\/p>\n
The CBBiH Law meets this condition. The Governing Board in the CBBiH has a relatively large strategic and policy role. But the key point is that the main roles of the main participants in BiH, the Parliament, the Presidency, the CBBiH Governing Board and the Governor, are all clearly set out in the law. This facilitated not only the survival of the CBBiH in Bosnia\u2019s complexities but also the set up of an efficient and effective institution.<\/p>\n
In the CBBiH, the Board sets the strategic direction of the bank, approves all internal by-laws, and approves the broad organisational structure. A proposal to separate the roles of the Chairman and the Governor was rejected because of the significant policy and operational roles of the Board. But in order to separate the important performance monitoring role of the Board, a Board Audit Committee was established. Initially the Governor was a member but it was chaired by one of the other Board members. Later, it has been changed to consist entirely of non-executive members.<\/p>\n
The important role that outside or independent directors can and should play in an institution has been rightfully emphasised. The CBBiH had four board members initially. The three \u2018local\u2019 members had all had extensive central banking, business or political experience. But none of them were current central bankers or politicians. They played a very significant role in establishing a culture of efficient performance and cost consciousness within the CBBiH.<\/p>\n","protected":false},"excerpt":{"rendered":"