financialsystem of b&h is “bank dominated”, which means that banks (creditinstitution) is dominated financial institutions in the financial system. bankshave major role in financial intermediation process between deficit and surplusmoney unites. having on mind specific features of financial systems in bosniaand herzegovina it’s important to analyses characteristics each segment offinancial system, specially banking sector, and identify which elements canhave impact on stability and safety of financial sector. only stabile financialsystem can ensure real economy stability. indirect role in stabilisationnational economy have central bank through managing financial stability andcooperating with national government.
currency boardsystem put some barriers on central bank role in managing financial stability.so author in this paper will be analyses structure of bh financial system, toidentified internal and external risk in banking sector, role of cbbh inmanaging financial stability, and analyses possible solutions in field ofmonetary policy and supervision for that purpose.
jel: g18, g21; g32; e58