Central Bank in the Function of Development of National Economy of Bosnia and Herzegovina

Abstract

The paper addresses and evaluates the currency boards’ policy and assesses whether the economic development of Bosnia and Herzegovina is the function of currency boards, as a form of monetary policy. In this context, a hypothesis that the currency boards provides the foundation for growth and development of a transition economy is being put to the test. To test the hypothesis, the paper compares the movement of economic growth indicators (gross domestic product) among the countries of South Eastern Europe with the primary focus on Bosnia and Herzegovina. By comparing the obtained results, as well as by applying the correlation and regression analysis, by means of simple linear regression, it is proven that the currency boards do not represent an obstacle to economic growth, but is the basis for establishing the stability of the economy and the basis for sustainable growth and development able to adequately respond to shocks.