Governor Softić: Remain Focused on EU and Eurozone Development

Governor of the Central Bank of Bosnia and Herzegovina (CBBiH) Dr. Senad Softić is participating in the 41st meeting of the Governors Club of the Central Asia, Black Sea, and Balkans region, held in
Istanbul on March 24th and 25th, 2019. Governor Softić was a speaker in the first panel, dedicated to the topic of global economic and financial outlooks, where he focused on the Balkan region and its perspectives.

With the key message that the region should pay attention to global trends, but the focus must be on the EU and developments in the eurozone, the governor specifically addressed the topics of euroisation, reform implementation, and building more resilient financial systems.

Explaining the focus on the EU, Governor Softić pointed out that the EU is the main trading partner for most countries in the region and that the entire region will feel the impact if there is a slowdown in key European economies. Furthermore, the entire region is closely tied to the euro, either through the adoption of the euro as legal tender or through monetary policy (currency board, etc.). In addition, the banking sector in most countries of the region is owned by international banking groups whose headquarters are in EU countries.

“The fourth reason is that all countries in the region are either EU members, candidate countries, or, like BiH, potential candidate countries. Therefore, EU rules are already being applied throughout the region or work is underway to introduce them,” emphasized Dr. Softić. 

The Governor also pointed out that it is difficult to predict economic crises, and that each country, on its own, cannot significantly influence the external environment, but that much can still be done internally.

“Each of us can do everything in our power in our own country to make our own economies and financial systems more resilient to potential shocks,” said the governor, adding that the key to success is continuous work on implementing reforms and strengthening systems during stable times.

As an example, the governor mentioned that it is necessary to consider not only systemic stability in our countries but also in neighboring ones. In addition, it is essential for central banks to continuously prepare for crises, developing possible scenarios and response methods. 

“Although we cannot predict a crisis, we can work on increasing resilience to it,” said Dr. Softić, noting that special attention should be paid to financial innovations (FINTECH) and their risks, which have not yet received sufficient attention.

In addition to the session where Governor Softić presented, the 41st meeting of the Governors Club discussed issues of central bank management and central bank communication for more effective monetary policy implementation.

The Governors Club of the Central Asia, Black Sea, and Balkans region brings together governors and other high-ranking officials from the world of monetary policy and finance to exchange views on current
topics and further improve mutual cooperation.