Central bank in managing financial stability and Economy in Bosnia and Herzegovina

Financial system of B&H is “bank dominated”, which means that banks (credit institution) is dominated financial institutions in the financial system. Banks have major role in financial intermediation process between deficit and surplus money unites. Having on mind specific features of financial systems in Bosnia and Herzegovina it’s important to analyses characteristics each segment of financial system, specially banking sector, and identify which elements can have impact on stability and safety of financial sector. Only stabile financial system can ensure real economy stability. Indirect role in stabilisation national economy have central bank through managing financial stability and cooperating with national government. Currency board system put some barriers on central bank role in managing financial stability. So author in this paper will be analyses structure of BH financial system, to identified internal and external risk in banking sector, role of CBBH in managing financial stability, and analyses possible solutions in field of monetary policy and supervision for that purpose.