The crisis management example of the Central Bank of Bosnia and Herzegovina Senad Softić, PhD Governor Central Bank of Bosnia and Herzegovina Amsterdam, February 16, 2018

Central Bank of Bosnia and Herzegovina (CBBH) CBBH model of monetary policy is the Currency Board Arrangement with required reserves as the only instrument of monetary policy. Due to the consistent implementation of monetary policy and the stability it has brought, the CBBH enjoys great public confidence and reputation. In times of crises: our strategic communication was our additional instrument of monetary policy, and our reputation was the most important pillar of our stability.

As it was the case during the crises in 2008 In case of Bosnia and Herzegovina, when the crisis started it took some time to reach our country and to evoke response. There was not much media attention - mostly in expert discussions. The public's attention rose sharply after the fall of Lehman Brothers. It culminates in early October when problems with European banks had started. The fear was that mother banks of some commercial banks in Bosnia and Herzegovina had investments in financial assets that failed and that they might require assistance.

Culmination of Crisis Nervousness culminated on October 9 and 10. It caused citizens’ pressure at bank counters. The trust of citizens in the banks begin to evaporate. News in the media comes in the sequels. In Bosnia and Herzegovina, 818 million KM of savings was withdrawn, or 6% of total savings during that first wave of crisis. The Central Bank of Bosnia and Herzegovina initiated a crisis management plan consisting of a series of measures under its authority including serious crisis communication.

The first step - measures The CBBH has helped to provide sufficient amounts of EUR cash if citizens wanted to convert their withdrawn savings. Reserve requirement rates were lowered three times in order to provide liquidity to the system. The CBBH decided that all new credit lines withdrawn from foreign banks by the commercial banks do not enter the base for calculating the required reserve. The last measure concerns the introduction of a differentiated rate of required reserve on commercial banks' deposits.

The second step – crisis communication Meeting with the financial sector representatives in order to coordinate efforts. Communication strategy underlined the stability of the system - due to negative experiences in the past. The message was simple and straightforward: "Our banking system is liquid and domestic banks have no problems". Unfortunately, at that time there was notable absence of the reaction of the government and commercial banks’ representatives.

CBBH took the lead (1) First Address by any official to the Public – Governor; 12 press releases issued in a short period of time; Communication with over 30 news posts; 24-Hour Daily Access to the PR Department was provided; 248 reports on the crisis in the month of October in BH media; 92 in November - the number fell after proactive media work; The crisis was put under control and that the communication strategy had calming influence on public. This would not have been possible if the announced activities and promised measures were not implemented.

CBBH took the lead (2) Announcements went through 17 different media outlets. Daily coverage of news (78% news in daily media); Governor and Vice Governors - over 20 public appearances and presentations (in addition to the media) in short time for various stakeholders; After the first wave, it was time to talk to all the stakeholders and see their feedback. Commercial banks also got involved in the process of guaranteeing the savings and offering to renew time-deposits contracts; The result - deposits begin to return to the banks.

Consequences left by the crisis Short-term decrease in total deposits – deposits were down 1.75% at the end of 2008, YoY. As of next year, deposits increased by 1.82%, or 3.61% a year later; Change in corporate communications policies in commercial banks - apart from marketing departments, today most banks have public relations departments and direct customer relationships; The good organization and functioning of the CBBH PR, on the one hand, and the building of good relations with the media on the other, played a key role in overcoming the crisis situation

Lessons learned Having a communication strategy in the case of a crisis is an obligation. In crisis communication, the most important and the scarcest resource is time; The CBBH had an elaborated crisis communication plan; Quality of relationship is essential - Building contact with the media takes place in "good times„; Crisis is also an Opportunity - The CBBH PR provided timely information and responded to media requirements in a timely manner, thus creating high-quality media relations.

Future steps We will continue to focus: on our transparent and timely proactive communication, building relationship with different stakeholders, improving education of different target groups to improve understanding on what is the role of the CBBH. This is the best way how we achieve our goals and preserve our reputation and trust we enjoy among general public in the country. CBBH's positive response to both measures and high-quality communication has strengthened its position as the most important institution of the financial sector in BiH and “anchor of the stability in the country”.

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