FINRA_draft_SOW.pdf

Financial Reform Agenda Activity (FINRA)

I Purpose

The purpose of the Financial Reform Agenda Activity (FINRA) is to improve financial sector stability in Bosnia and Herzegovina (BiH). The activity will support financial sector reforms outlined in the IMF Extended Fund Facility (EFF) policy benchmarks, which in turn support the European Union (EU) Reform Agenda (RA) for BiH to join the EU. FINRA assistance will focus on improving banking supervision, deposit insurance, central banking and audit/quality of government spending.

II Funding

FINRA activity total estimated cost/amount range is $4M-$9.99M.

FINRA is a three-year contract with one option of a two-year extension. Prior to exercising the option, USAID/BiH will consult stakeholders, such as IMF and host country partners, and may conduct a performance evaluation. FINRA scope will be flexible and include technical assistance to host country counterparts, however support must also be available for sub-contracts/grants for specialized services or in-kind contributions (i.e. equipment in support of regulation implementation).

Of the total budget for the FINRA activity, up to US$ 2 million (US$ 1.5 million in the base period and US$ 500,000 in the option period) will be set aside for in kind assistance and/or grants to host country government partners in support of the implementation of banking sector reform and upgrading of Central Bank systems and practices in line with the EU requirements and IMF recommendations.

III Background

Development Challenge and CDCS Framework

BiH is far from meeting EU accession criteria for economic readiness (or Copenhagen Criteria):

“existence of a functioning market economy and the capacity to cope with competitive pressure and market forces within the Union.” In order to make the transition to a market economy and meet EU standards, BiH must address undeveloped economic policies, complex yet weak regulatory systems, and high unemployment. An important economic indicator is the private sector’s share of GDP, at around 50 percent one of the lowest among transition countries in the region. Private sector growth requires a consistent and competent legal, regulatory, and administrative environment to give incentives to creditors and investors.

The principal economic challenge in the financial services sector mirror the broader challenges of the economy: to create a facilitating environment for sound business growth through improvement of regulatory systems. Bosnia and Herzegovina is still in an initial phase in the EU accession process and much needs to be done to ensure that all policies, regulations, and practices meet EU standards.

Banking supervision, Deposit Insurance and Insurance - Both entities, supported by the IMF and World Bank, have made progress in preparing new banking laws that are consistent with EU directives and Basel requirements. However, further assistance will be needed in implementation of the comprehensive regulatory framework (once laws are adopted) and also for developing supporting regulations. These laws are expected to strengthen supervisors’ corrective and enforcement powers, introduce consolidated supervision, and improve crisis management and resolution frameworks. Related legislation, such as the Deposit Insurance Agency (DIA) law, is also in the process of being amended, particularly to enable for the resolution process which would deal with any failing systemic banks. The incorporation of client institution risk into the deposit insurance premium calculations is a longer term goal of the DIA. Improving the legal and regulatory front in insurance market could greatly improve transparency, efficiency and confidence in the insurance sector.

The “Bosnia and Herzegovina: Financial System Stability Assessment (FSSA)” by the International Monetary Fund (2015) is a highly relevant assessment for this sector. The 2015 Financial Sector Assessment Program (FSAP) found that banking and insurance oversight have improved since the 2006 Financial Sector Assessment Program (FSAP), but also noted that supervisors’ corrective and enforcement powers are weak. According to 2015 FSAP, regulatory and supervisory responsibilities for banking, insurance, and capital markets are fragmented;

although the establishment of the Standing Committee on Financial Stability has improved coordination. Cooperation among the various oversight institutions is complex, having potential repercussions in times of stress. According to 2015 FSAP, the current insurance prudential framework, which is based on Solvency I framework, is not risk-sensitive and is ill-suited for supervision as the market develops. In addition, FSAP highlights that the formal assessment of the real-time gross settlement system suggests that many of the principles are observed, but legal and liquidity risks as well as lack of oversight powers are weaknesses.

The IMF FSAP from 2015 identified a comprehensive set of priority recommendations (immediate, near term 1-3 years, and medium term 3-5 years) to enhance the stability and development of the financial system in BiH, all of which fall under the scope of this activity.

The Annex provides a full list of recommendations; the implementing partner must develop a plan on how to address these within Phase I and Phase II

FINRA is consistent with USAID/BIH/BiH’s CDCS for FY 2010-2016 and supports the achievement of Development Objective 2: “Bosnia and Herzegovina is a competitive, market-oriented economy providing better economic opportunities for all its citizens”, and specifically IR 2.2: Improved economic aspects of governance relevant to business activity, and IR 2.2.1:

Regulations and policies foster private sector development and investment. The FINRA activity is included in Project Approval Document (PAD) 2.2.

USAID has been one of the key donors supporting financial sector development in BiH. Since the closure of USAID projects in this sector, unmet demand for longer term technical assistance within the sector exists. This has been indicated in discussions with host country counterparts and the IMF. FINRA activity will build and improve on previous USAID assistance.

The following web link provides the evaluation report of one of USAID's previous banking assistance project:

http://pdf.usaid.gov/pdf_docs/PA00JP6T.pdf Bidders are encouraged to review and build on lessons learned.

A key development issue highlighted in the evaluation of USAID/BIH's previous banking assistance project was counterparts’ lack of will to change banking supervision. The evaluation noted that the USAID/BIH activity addressed this by focusing on technical issues and capacity development. One of the recommendations was that USAID/BIH activities need greater focus on building broad political support for EU-related reforms. These lessons have been incorporated in designing FINRA, which is linked to IMF and EU Reform Agenda levers to push for adoption of laws. However, some of the inherent development challenges will remain even once the laws are adopted, as implementation (core of FINRA assistance) will also depend on the political will and capacity of the host country partners. As noted above, FINRA can provide capacity building and build building blocks, but the leadership and commitment for implementation will have to come from host country partners. This is somewhat mitigated by MOU mechanisms required at the outset of FINRA to enlist commitment of counterparts and an award structure with base and option periods.

EU pre-accession process for Bosnia and Herzegovina is guided by the EU’s RA (adopted in June, 2015), which represents a political endorsement by different governance levels (state and entity) of the need to pursue economic reforms required by the EU Stabilization and Association Agreement (SAA). The EU RA sets out the plans for social, economic and related reforms (including public administration and rule of law) at all levels of government to foster stable, sustainable economic growth, fiscal and financial sustainability, and a favorable and just social environment. Meaningful progress on the implementation of the RA is necessary for BiH’s membership application to be considered positively by the EU.

The RA includes a set of medium-term priorities in six main areas. More specifically, with regard to economic policies, the BiH governments agreed to focus on:

1. Intensifying reforms to improve the business environment, attract investment, and raise the economy’s growth potential.

2. Resuming fiscal consolidation to place public debt on a steady downward path, while improving the quality of government spending.

3. Safeguarding financial sector stability and reviving bank lending.

FINRA will have a particular focus on the implementation of reforms that are focused on the financial sector and quality of government spending.

Following the adoption of the RA, the governments (BiH Council of Ministers, Federation BiH Government, RS Government) have adopted detailed action plans with specific steps that should be met in the short-term (1-2 years), and have started with action plan implementation. Below http://pdf.usaid.gov/pdf_docs/PA00JP6T.pdf are specific measures related to the financial sector in each of the three action plans of the reform agenda:

● Council of Ministers –Adopt new laws for the finance sector harmonized with EU Directives and the Basel Terms

● Federation BiH Government -Law on Banks, Alignment with the EU and the Basel framework; Resolution on banking

● Federation BiH Government-Strengthen banking supervision by the Banking Agency, continuous oversight of problematic banks

● Republika Srpska Government -Legal framework for the collection and resolution of non-performing loans; establishment and supervision of management companies’ assets and extrajudicial debt restructuring

● Republika Srpska Government-strengthen banking supervision by the entity Banking Agencies

A key financial and policy lever for RA implementation is the IMF EFF agreement, approved in September 2016. The EFF has a catalytic role in mobilizing additional international financial assistance, tied to meeting EFF benchmarks.

The IMF EFF program is a EURO 550 million economic program, and includes a number of conditionalities/disbursement benchmarks that are tied to implementation of the RA. The IMF program has three explicit objectives, as follows:

Structural Reforms: Raise growth potential and boost private sector employment by intensifying structural reforms that improve the business environment and attract investment.

Fiscal Policy: Improve the composition and quality of public spending, while gradually lowering public indebtedness.

Financial Sector: Revive bank lending and credit growth while safeguarding financial stability through financial sector reforms.

Specific measures in the IMF EFF program related to the financial sector include:

● Maintaining the currency board arrangement to anchor policies and to safeguard Central Bank independence.

● Developing comprehensive strategies to address vulnerabilities in banks, and strengthening operations and oversight of entity development banks.

● Passing laws to modernize banking legislation, strengthening cooperation among financial sector agencies and addressing the high level of non-performing loans (NPLs).

IMF Structural benchmarks related to FINRA

The BiH governments have agreed to the following structural benchmarks related to the financial sector from the IMF EFF Program (those in bold relevant to FINRA):

1. Continue to adhere to the currency board arrangement as constituted under the law.

2. Refrain from imposing mandatory conversion of any foreign currency-denominated loans into local currency.

3. Federation Banking Agency to make final assessment of recapitalization plans for banks that reveal capital shortfalls based on their Asset Quality Review (AQR) results.

4. Federation parliament to adopt a new draft Law on Banks and amendments to Banking Agency Law in line with IMF staff recommendations

5. RS parliament to adopt a new draft Law on Banks and amendments to Banking Agency Law in line with IMF staff recommendations.

6. State parliament to adopt amendments to the Law on Deposit Insurance in Banks in BiH in line with IMF staff recommendations

7. RS Banking Agency to make final assessment of recapitalization plans for banks that reveal capital shortfalls based on their AQR results.

In the last quarter of 2016, the entity (RS and Federation BiH) Finance Ministries, together with the entity banking agencies, drafted the new RS and Federation BiH Laws on Banks and RS and Federation BiH Amendments to the Laws on Banking Agency with the assistance of IMF and World Bank staff. In December 2016, the two RS banking laws (the RS Law on Banks and the Law on RS Banking Agency) were adopted. The Federation BiH banking laws and the Amendments to the State level Deposit Insurance law are expected to be adopted in early 2017.

This set of 5 laws and amendments (2 Federation, 2 RS, and 1 State) are part of the IMF conditionality and the legal basis for implementation of comprehensive banking reforms in BiH and the basis for FINRA.

Once banking laws are adopted, implementation will be the next challenge. IMF is focused on regulatory adoption as a structural benchmark while the World Bank will assist with a limited 12-month activity to support implementation of the banking laws at the two banking agencies.

In designing FINRA, EDO management met the Federation BiH banking regulator and the IMF and WB teams in October 2016 to assess the need and scope of complementary USAID/BIH assistance. The WB team noted that the capacity and support needs of the proposed regulatory reforms exceed their planned assistance and, therefore, recommended USAID/BIH support. The host country partners, along with the IMF and WB, commended previous USAID/BIH assistance in the financial sector as effective building blocks for the comprehensive regulatory reform process.

FINRA activity will rely on the following three IMF benchmarks which create the basis of comprehensive banking sector reform in BiH.

• Federation parliament to adopt a new draft Law on Banks and amendments to Banking Agency Law in line with IMF staff recommendations

• RS parliament to adopt a new draft Law on Banks and amendments to Banking Agency Law in line with IMF staff recommendations.

• State parliament to adopt amendments to the Law on Deposit Insurance in Banks in BiH in line with IMF staff recommendations

The assumption is that prior to the start of FINRA activity, all five laws and/or amendments have been passed or are in final legislative phase. At the 21st session of the RS National Assembly, held on December 27, 2016, the two RS banking laws were adopted. The Federation BiH banking laws have been submitted to the Federation BiH parliament. The amendments to the State level DIA law are expected to be submitted to the BiH parliament in the first quarter in 2017. This set of 5 laws (2 Federation BiH, 2 RS, and 1 State) represent the legal basis for implementation of comprehensive banking reforms in BiH – are the precondition of effective FINRA assistance.

IV. Description of the Activity and Results

The purpose of the Financial Reform Agenda Activity (FINRA) is to improve financial sector stability in Bosnia and Herzegovina (BiH). This purpose is directly aligned with the Mission’s Project 2.2 sub-purpose that states that “Financial sector (is) in line with international standards, where the Mission will measure progress in meeting this purpose with the “Level of compliance with relevant international financial standards”. This purpose will be achieved by providing targeted, demand-driven assistance to implement specific IMF EFF, FSAP policy benchmarks and meet EU Reform Agenda priorities for BiH, particularly those related to the financial sector regulatory system and the environment for private sector investment and growth.

FINRA’s goal is to strengthen the regulatory system for the financial sector. One of the main objectives of the financial sector reforms is to allocate resources more efficiently, increasing the return on investment and accelerating growth of the real sectors in the economy. A well-regulated financial sector is critical for efficiently allocating capital in the economy, and for the last three consecutive years the private sector has highlighted access to finance as one of the problematic issues for doing business in BiH. Thus, FINRA should improve the enabling environment for private sector investment and growth through increased access to finance.

Ensuring greater financial stability will also reduce the risk of bank failings and related public costs of loss of government deposits in failed banks. Greater compliance with prudential banking regulations will help protect the BiH economy, its companies, and its citizens from a financial crisis. In the last year two banks in the RS have failed. While the effect has been relatively limited, these are BiH's first bank failures over the last decade and public funds have been lost in failed banks. This points to synergies between FINRA and other USAID/BIH activities, especially those related to SMEs competitiveness and quality of government spending and transparency. In addition, during the adoption of banking laws, USAID/BiH has ensured synergies with other USAID/BiH activities, especially USAID/BiH’s work with Parliaments through closely coordinating with and leveraging Strengthening Government Institutions Project (SGIP) activity. The contractor will pursue opportunities for synergy and coordination with other USAID/BiH activities as they arise.

The FINRA activity is structured to achieve a number of defined activities and results, yet allowing for additional initiatives depending upon windows of opportunity, as the Reform Agenda Action Plans are updated. The design incorporates: 1) specific areas (two first components listed below in normal font are part of the IMF program and the RA action plans), and 2) optional area (last component listed below in italic font is not in the present RA action plans) where assistance will depend on USAID/BIH’s available budget resources and upon political will for reform:

Component I: Banking Supervision and Insurance Component II: Central Banking Component III (optional): Audit of public financial resources and quality of government spending

FINRA is expected to work primarily with the following government institutions- the Central Bank of BiH, the Federation BiH Banking Agency, the RS Banking Agency, the BiH Deposit Insurance Agency. The contractor must, as needed, work with the entity Ministries of Finance, BiH Ministry of Finance and Treasury and insurance regulators and other host country partners in the financial sector.

Given that that there are different government institutions at different governance levels which are responsible for financial sector supervision and stability, and one of the goals of the banking sector reform is to ensure maximum harmonization of regulatory regimes across entities and financial stability in BiH, FINRA will ensure that all of its assistance is deployed in a harmonized and balanced manner across various BiH Government levels (in the RS, the Federation, and at the State level), recognizing that some processes are interconnected and also respecting respective governance and constitutional roles.

MOUs will be put in place to engage key partners and ensure their commitment to implementation of reforms. The contractor must enter into MOU with key host country partners at the beginning of the activity to solidify their commitment to reforms, implementation of reforms and assistance.

Activities Assistance under FINRA must include the following areas, with priority placed on assistance to banking regulators and the Central Bank and all relevant host country partners to ensure the implementation of the IMF benchmarks and the EU Reform Agenda and advance EU SAA accession in the area of financial sector development and audit/quality of government spending.

The list below of activities is subject to further refinement according to host country counterpart needs and subject to USAID/BIH approval.

Component 1- Banking Supervision and Insurance

• The contractor must provide assistance and facilitate operational processes that will lead to full implementation of banking laws and regulations in the Basel II/III bank supervision framework by both entity agencies according to the (to be) adopted new banking Laws and Banking Agency laws and the IMF program; it is expected that these laws will be adopted prior to the beginning of this activity, and thus the contractor’s focus will be placed on full implementation of the legislative framework, per IMF benchmarks and in coordination with the WB program.

Based on host country partners (regulators) needs and commitment, assistance must be provided to align banking supervision with the Basel II/III, relevant EU Directives (Capital Requirements Directives IV (CRD IV) and the Capital Requirements Regulation (CRR) CRR), areas of assistance to include regulatory framework, supervisory tools and supervision capacities.

• The contractor must provide capacity building, training and in-kind assistance for banking supervision regulators and all other relevant host country partners to implement the new banking regulation framework, in close consultation with the IMF and the WB program. Capacity-building activities and in-kind assistance will directly complement and support the operational plan for implementation of the banking reforms, in close consultation with the IMF and World Bank. The contractor must provide assistance to regulators to advance compliance with the specific IMF FSAP recommendations, based on regulators’ needs and priorities.

• The contractor must provide assistance to the DIA BiH to fully implement the new regulatory framework advanced in the respective laws on banks and deposit insurance as part of the IMF EFF. The contractor must provide capacity building and assistance to the DIA BiH to fully implement the core deposit insurance principles as set by the Internal Association of Deposit Insurance (IADI) and meet all relevant EU SAA requirements, based on DIA BiH needs and priorities.

• If host country partners advance reforms in the broader insurance area and USAID/BIH provides approval for assistance in this area in the work plan, the contractor must provide assistance to regulators and ministries in reducing compliance gaps between insurance legislation and the European Directives for insurance while advancing compliance with the specific IMF FSAP recommendations related to insurance regulation.

Component 2- Central Banking

• The contractor must provide demand-driven assistance to the Central Bank of BiH to assist the CB BiH in capacity building and its alignment with EU requirements and best practices. Subject to Central Bank needs and priorities, the contractor must provide assistance to advance compliance with the specific IMF FSAP recommendations.

Component 3 -Audit of public financial resources and quality of government spending

• Subject to available budget resources and need for assistance, the contractor must provide assistance in the area of quality of government spending related to specific RA agenda priorities and the RA action plans (as updated). The contractor must provide assistance that will not be generic capacity building but be prioritized on the basis of meeting specific RA action plan benchmarks. Subject to available budget resources and need for assistance, the contractor must provide assistance in the area of internal and/or external audit and related legislation. This will include supporting systems to increase the effectiveness of auditors and other relevant public bodies in BiH to conduct performance and financial reviews to prevent corruption. The contractor must provide assistance that will not be generic capacity building but be prioritized on the basis that it should result in specific and tangible improvements in the internal control environments (specifically mitigate the risk of corruption and fraud) of various governmental/quasi-governmental institutions. This component will be implemented at the Federation, RS, and BiH State level, as determined by USAID/BiH and the contractor based on available resources and existing opportunities.

During the course of FINRA activity, the contractor must be in close coordination and consultation with the IMF on FINRA assistance as it relates to progress on implementation of banking reforms and progress on compliance with 2015 IMF FSAP benchmarks (per Annex).

To achieve FINRA objectives, the contractor must achieve the following results:

Result One: BiH advances towards compliance with the EU accession requirements, as set out in the Reform Agenda, the EU Progress Report and the IMF program in areas of strengthening financial stability, public audit and quality of government spending.

USAID and the contractor will more precisely define “advances towards compliance” through the development of the activity Monitoring and Evaluation and Learning (MEL) Plan

Result Two: Policies, laws and regulations from the IMF EFF, FSAP, the EU Reform Agenda and those required by the EU SAA process are drafted for adoption and implementation in the financial, audit and quality of government spending areas.

V Monitoring, Evaluation and Learning

Within the annual work-plan, the contractor must develop a detailed Monitoring and Evaluation and Learning (MEL) Plan that allows for measuring implementation progress against performance indicator(s) and related targets and benchmarks. This MEL plan needs to capture progress on implementation of banking reforms and tie these to the Reform Agenda and the IMF benchmarks, as well as progress on compliance with FSAP benchmarks. The MEL will be approved by USAID/BIH.

USAID/BIH will measure progress against the Reform Agenda milestones, the EU progress report for BiH, the IMF FSAP, as well as other IMF financial sector and country reports.

Recognizing that the final expected result is implementation of laws and at the same time the limitation of the FINRA activity/contractor to actually implement legislation, once the FINRA activity in launched, USAID/BIH will consult with the USAID/BIH M&E contractor (MEASURE), host country partners and possibly IMF to develop an appropriate M&E tool that could include 3rd party verification of the implementation progress.

In addition, the contractor must report on an annual basis on a set Foreign Assistance Standardized Program Structure Element (F) Indicators, illustrative ones listed below.

Number of financial sector supervisors trained with USG assistance

Number of financial sector professionals trained on international standards with USG assistance

Number of Internationally recognized financial sector standards adopted as a result of USG assistance

Number of mechanisms for external oversight of public resource use supported by USG assistance implemented

The contractor must also track a number of contextual indicators, though there are no specific targets for these.

An illustrative list of contextual indicators is:

• Share of credit as GDP

• Credit growth, and especially private sector credit growth

• Share of non-performing loans (NPL)

• Growth of deposits, and especially insured deposits

VI Cross-cutting

Gender USAID/BiH commitment to advance gender equality and purse gender as a key development issue must be fully reflected in FINRA. Gender considerations must be integrated into FINRA activity, ensuring that men and women both benefit from USAID support. To ensure gender equality, FINRA must promote gender balanced representation and participation in policy-making processes, as relevant to the scope of FINRA activity. Also, FINRA contractor shall support gender-balanced participation in all USAID funded capacity building events, training, technical assistance programs, study-tours etc. Additionally, for training and capacity building activities, the contractor must collect and report gender-dis-aggregated data. Such data must be current, readily accessible, and highlighted by the USAID contractor in external and internal quarterly and annual reports. The Contractor must also analyze data to alert USAID to gender issues, identify gaps, and propose solutions.

Anti-corruption USAID/BiH commitment to advance anti-corruption and increase transparency as a key development issue in BiH must be fully reflected in FINRA. Anti-corruption and transparency considerations must be integrated into the FINRA activity, and the contractor in its technical approach must document how FINRA will address and reduce corruption in BiH and increase transparency.

Annex:

IMF FSAP/FSSA 2015

Recommendations and Authority Responsible for Implementation Time

Banking Oversight

Develop a remedial action program focusing on new tools, earlier step-up enforcement and heavier fines to expedite corrective action (FBA, BARS, relevant Ministries of Finance and Justice).

NT

Strengthen provisioning under IAS by issuing standards to encourage conservative assumptions on impairment by banks (FBA, BARS).

MT

Enact new Laws on Banks and amend relevant legislation addressing deficiencies in supervisory powers, consolidated supervision, and identification of ultimate beneficiary owners (FBA, BARS, CBBH, Ministries).

I

Conduct additional AQRs in banks with weak solvency and liquidity indicators (FBA, BARS).

I

Assure that banks continue implementing IFRS and external auditor implement IAS (FBA, BARS).

MT

Insurance Oversight

The appointment of the FBiH-ISA director should be based on the relevant law (Government).

MT

The new insurance law in the FBiH should be approved if it shows improved convergence towards the EU insurance directives (FBiH-ISA).

I

Introduce a formal channel of information sharing with banking agencies (FBiH-ISA). I

Update solvency regime by a gradual incorporation of risk elements, develop an early warning system, including prompt corrective actions. Capacity building is required (ISAs).

I

Financial Safety Net, Resolution of NPLs, and Systemic Liquidity Management

Revise the reserve requirements, maturity mismatch, and the liquidity ratio (CBBH, FBA, BARS).

NT

Design and implement the LCR, adapted to BiH (FBA, BARS). MT

Revise the consequences to banks for not complying with reserve requirement (CBBH). MT

Enable prompt depositor pay-out (DIA). I

Provide resolution powers to the FBA and BARS for banks in their respective jurisdictions on the new Laws on Banks, following the FSB Key Attributes and EU BRRD (FBA, BARS, DIA, relevant Ministries)

I

Broaden the scope to draw on the existing DIF for funding bank resolution using least-cost solution (DIA)

I

Establish a Financial Stability Fund (FSF)—under the DIA—to provide for open bank resolution and limited and temporary liquidity support in systemic crisis (DIA, CBBH, FBA, BARS, Governments).

MT

Strengthen, regularly review, and test bank contingency plans of SCFS members (SCFS). I

Strengthen the cooperation between DIA and financial safety net players (DIA, CBBH, FBA, BARS).

I

Add macroprudential analysis and policy to the coordination MoU. Define and collect additional information for the assessment of vulnerabilities and macroprudential tools (CBBH, FBA and BARS).

NT

Streamline collateral execution procedures by allowing a final auction at no reserve price if previous rounds of auctions failed and specify realistic criteria for asset market values (RS/FBiH Ministry of Justice).

I

Consider tools and incentives to facilitate restructurings and debt resolution as well as adoption of out- of-court restructuring guidelines. (RS/FBiH/BiH MoF, FBA, BARS).

I

Revise the insolvency framework by introducing incentives to initiate proceedings early and expand the insolvency framework to cover businesses run by individuals. (RS/FBiH MoJ).

NT

Financial Market Infrastructure

Strengthen the legal framework to designate payment systems, and to protect settlement finality and netting in line with international standards (CBBH).

NT

Develop a comprehensive risk management framework for the RTGS system (CBBH). I

Stress test the RTGS system, including the default of the largest participant and affiliates

(CBBH).

NT

Establish a recovery time objective for the RTGS system following disruptive events

(CBBH).

I

Establish a new oversight unit in Payment Systems Department, which is staffed with sufficient resources to carry out oversight responsibilities (CBBH).

NT

FBA-Federation Banking Agency, BARS- Banking Agency of RS, CBBH- Central Bank, DIA- Deposit Insurance Agency, ISA-Insurance Supervision Agencies I-Immediate” is within one year; “NT-near-term” is 1–3 years; “MT-medium-term” is 3–5 years.