Success of entity banking agencies: European Commission decides on harmonization of banking regulatory and supervisory framework in BiH
In accordance with the information available on the official website of the European Commission, a decision of the European Commission (EC) is expected by the end of this year confirming the equivalence of the supervisory and regulatory framework in Bosnia and Herzegovina in relation to Regulation (EU) No. 575/2013 of the European Parliament and the Council on prudential requirements for credit institutions and investment firms and amendments to the Regulation (EU) No. 648/2012 (CRR) and Directive 2013/36/EU of the European Parliament and the Council on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms (CRD).
The final decision of the European Commission represents the achievement of a strategic goal that is of great importance for Bosnia and Herzegovina, the banking system, the economy and citizens. In the period from 2017 until today, the Banking Agency of Republika Srpska and the Banking Agency of the Federation of BiH have carried out key strategic activities to harmonize the regulatory and supervisory framework in BiH with relevant EU regulations and directives. The equivalence assessment process included detailed reviews, coordination and documentation of requirements in accordance with the principles stipulated by the EC and the European Banking Authority (EBA). Direct control activities and reviews by the EBA were conducted in the second half of 2019, which included visits to Bosnia and Herzegovina by leading experts on the subject of supervision and regulatory framework. Unfortunately, the pandemic of the COVID-19 disease has led to a slowdown in activities during 2020 and a commitment to issues of protection of the economy and citizens. Intensive activities of the EBA and the EC continued in 2021. Coordination of activities by the entity banking agencies was supported by the entity Ministries of Finance, the Association of Banks in BiH, banks, the Central Bank of BiH and important business entities which were the subject of visits and controls conducted by the EBA. The results of equivalence assessments are far-reaching and include an understanding of whether the degree of application of the regulatory and supervisory framework in Bosnia and Herzegovina is such as to ensure effects that are identical to those in the EU.
Reviews and verifications are carried out in important segments such as: efficient and adequate protection of depositors and consumers - users of financial services, stability and integrity of the domestic financial system, cooperation between various participants in the financial system, including regulators and supervisors, proper implementation and enforcement of relevant internationally agreed standards, which are transposed from the EU legislation, etc. Special attention is paid to the review and verification of independent and efficient supervision. In this segment, the institutional and regulatory framework for the banking sector in BiH, taking into account the specifics of our regulation, is assessed as advanced, harmonized and regulated according to the rules that apply in the EU. The status and importance of our institutions in future cooperation with relevant EU institutions is changing, which is extremely important in the EU accession process. Equivalence in the segments of supervision and regulatory framework for the banking system is of particular importance in other assessments and potential long-term effects on the status of Bosnia and Herzegovina, rating assessments, risk weights for calculating capital requirements to cover banking risks, interest rates, investment security and other. Fulfillment of the most important strategic goal places new demands on maintaining the harmonization and stability of the banking system. The Banking Agency of the Federation of BiH and the Banking Agency of Republika Srpska remain committed to the interests of citizens and the economy