Mahmuzic: Moneyval grey list does not threaten banks, but complicates transactions

A BiH delegation is expected to report to Moneyval today on the measures that have been adopted, and ahead of the decision expected on May 8, public discussion has increasingly focused on possible negative effects on the financial system, including higher transaction costs and the introduction of additional control mechanisms. However, Mahmuzic emphasized that none of the objections from international bodies are directed at the banking or financial sector in Bosnia and Herzegovina.

"Within the banking sector, we have done everything that was required, and we did it on time. We have no objections related to the work of banks or their compliance with international standards," Mahmuzic said.

He explained that the assessment process has two aspects: technical and political. While the technical part, relating to the banking and financial system, has been fully met, the political part of the reforms has not been completed promptly.

"There are certain political interests that, at times, are reflected in individual countries. Bosnia and Herzegovina was given certain requirements that were both technical and political. In the banking sector, we did everything that needed to be done, and we did it on time. The other part, unrelated to the banking sector, was not completed on time. Some progress was made yesterday, but not everything that needed to be done has been completed," Mahmuzic said.

As a particular problem, he highlighted the failure to adopt a law on the management of seized assets, which is one of the reasons why there is still a risk of BiH being placed on the grey list. Nevertheless, Mahmuzic expressed hope that this outcome will be avoided and stressed that even if BiH were placed on the grey list, it would not mean a collapse of the system.

"If that does happen, it will not be the end of the world, nor will anything dramatic occur. However, there will be certain difficulties in carrying out international transactions. Transactions with foreign countries will be slower and subject to greater scrutiny. This will mean increased costs for correspondent banks that handle these transactions, which in turn will mean higher costs for banks in BiH. Whether those costs will be high is difficult to assess at this point. Whether those costs will be passed on to end users is also hard to predict," he said.

He assessed that there is no risk of foreign banks withdrawing or of a breakdown in cooperation with international partners.

The Banking Agency of the Federation of BiH organized a conference in Sarajevo, on Tuesday, titled "Three Decades of Stability and Trust: The Role of the Banking Regulator in the New Financial Order", marking its 30th anniversary.