02401cas a2200241 a 4500 AALejournalIMF015992 230101c9999 xx r poo 0 0eng d 5.00 USD 9781513517469 1934-7685 BD-DhAAL BD-DhAAL International Monetary Fund. Monetary and Capital Markets Department. Bosnia and Herzegovina : Technical Assistance Report-Implementation of a New Reserve Requirement Framework. Washington, D.C. : International Monetary Fund, 2019. 1 online resource (55 pages) IMF Staff Country Reports <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This Technical Assistance (TA) report on Bosnia and Herzegovina highlights that the negative spread in a context of structural lower returns on foreign exchange reserves and sizable capital inflows has led to a gradual and steady erosion of the currency board coverage ratio. The Central Bank of Bosnia and Herzegovina (CBBH) requested Technical Assistance to review its reserve requirement framework. The mission recommends aligning the remuneration of reserve requirements on foreign exchange liabilities to the CBBH's opportunity cost. The mission also recommends prescribing the fulfilment in foreign currency of the reserve requirements for foreign currency liabilities. It also suggested altering the remuneration scheme of domestic reserve requirements. In order to be neutral from an intermediation perspective, the reserve requirement remuneration should be aligned to the market-neutral uncovered interest rate parity rate, whereas the remuneration of excess reserves may take place significantly below the market-neutral rate but at or above the foreign currency remuneration rate. The CBBH may benefit from a constructive dialogue with the Area Department or TA to set the new rates of remuneration of domestic reserve requirement and excess reserves. Mode of access: Internet IMF Staff Country Reports; Country Report ; No. 2019/316 Full text available on IMF http://elibrary.imf.org/view/journals/002/2019/316/002.2019.issue-316-en.xml IMF e-Library