Bosnia-Herzegovina Banking System Receives Upgrade
Nearly every citizen of Bosnia-Herzegovina has a horror story to tell about losing their bank savings at the start of the war. The experience caused people to lose faith in the banking system, choosing instead to keep their money at home under a mattress.
USAID recognized that progress could not take place in BiH without a modern, secure banking system. Banks needed to regain the trust of citizens so they could start receiving deposits once again. These deposits could then be lent to worthwhile businesses, thus creating jobs and boosting the economy. After collaboration with the U.S. Treasury, USAID signed a grant awarding funds to the newly created Deposit Insurance Agency (DIA) in 2000. The donation included KM 15 million to fund the equity account and an additional KM 3.3 million to fund the operations of the DIA. Today, some 21 banks are enrolled in the program, which insures citizens’ deposits up to 7,500 KM.
In addition to guaranteeing the safety of citizens’ deposits, USAID has also carried out a program to strengthen banking supervision to ensure commercial banks are healthy and adequately regulated and depositors are protected from bank failures.
More recently, USAID helped inaugurate the BiH Pledge Registry, a secured financing system involving movable property. BiH citizens now have the same options as those living in Europe and North America. They can obtain credit using property such as vehicles and machinery as collateral.
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| BiH citizens now enjoy a modern banking system in which credit is widely available and deposits are protected |
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