Why Bosnia and Herzegovina prints one currency in two designs

Why the convertible mark comes in two designs

Before 1998 three currencies divided the territory. The Bosnian and Herzegovinian dinar was used in one part of the country, the Serbian dinar in another and the Croatian kuna in a third, and in the account of the Central Bank of Bosnia and Herzegovina the one money trusted equally across all three areas was the Deutsche Mark. That trust decided the name of the new currency. The currency board anchored the convertible mark to the Deutsche Mark at the start and to the euro later, and the word mark stayed.

The constitution printed as Annex 4 of the Dayton agreement made the Central Bank the sole authority for issuing currency and for monetary policy throughout the state, and for its first six years barred it from extending credit by creating money. The State Department dates the bank's adoption of a currency board to 1997. Debt talks followed with the London Club in December 1997 and the Paris Club in October 1998, and the notes arrived in two instalments: 50 fenings and 1, 5 and 10 marks on 22 June 1998, then 20, 50 and 100 marks on 27 July 1998.

Whose portraits appear on which version

The design problem was acceptance. To have the notes taken equally in both Entities, the bank printed them in two versions, each carrying text in both Latin and Cyrillic script. The 20-mark note for the Federation of Bosnia and Herzegovina carried the writer Antun Branko Šimić, and the version first put into circulation in Republika Srpska carried the folk singer Filip Višnjić. The 50-mark note paired Musa Ćazim Ćatić with Jovan Dučić, and the 100-mark note Nikola Šop with Petar Kočić. All of them except the later 200-mark note were printed by the François-Charles Oberthur works in Paris.

In the bank's account, the separation lasted minutes, at most hours, before notes left the part of the country where they had been issued, and soon every variant circulated everywhere. The 200-mark note, issued on 15 May 2002 with a portrait of Ivo Andrić, has one design for the whole state. The 10, 20, 50 and 100-mark notes are still issued in pairs, most recently in a series dated 13 March 2024, and the bank states that every note in circulation is legal tender throughout Bosnia and Herzegovina.

What a fixed rate leaves to the outside world

The rate has not moved since the currency was issued: one convertible mark buys 0.511292 euro, and one euro costs 1.955830 marks. The statistics agency used 1.9558 as the average rate for 2024 and again for 2025, which is how a fixed peg looks in a table. The bank puts notes into circulation and withdraws them in strict compliance with the currency board rule written into its founding law. Inflation was 6.1% in 2023 and 2.2% in 2024 on State Department figures, and the World Bank recorded a rise to 3.4% in June 2025, pushed up by food prices.

Two statements about everyday payment sit side by side in the sources. Britannica records that the euro also circulates as semi-official legal tender. The State Department reports that the two Entities' laws on foreign currency exchange require all payments inside the country to be made in the national currency.

How Yugoslav industry shaped the Bosnian economy

Inside socialist Yugoslavia the republic was a mineral processing centre, supplying the other republics with basic mineral commodities in exchange for consumer goods. Large amounts of public capital arrived in the 1970s, and metal-product industries were promoted until a large share of Yugoslavia's metal products plants stood inside the republic. Productivity stayed low, which the economy article attributes partly to the limited capacity of public managers.

The Yugoslav habit of merging small firms to protect employment produced four large conglomerates. Energoinvest worked in energy, Unis in vehicles and defence, Šipad in wood processing and RMK Zenica in steel. Unis partnered with Volkswagen in the early 1970s, and passenger and commercial vehicles came to be built in Sarajevo, Mostar and Banja Luka. The defence industry clustered in the south and around Mostar, which also had the Aluminij smelter. Machinery was concentrated in the north around Banja Luka, and the Tuzla district made chemicals. Agriculture mattered for employment and was little developed, although the large Agrokomerc conglomerate operated at the northwestern border with Croatia.

The war ended that economy. Material damage is put at more than €200 billion, and the fall in output is recorded two ways: gross domestic product fell 60% in the account given in the main article on the country, while the article on its economy says output excluding services fell 90% between 1990 and 1995. Output recovered at high rates from a low base in 1996 to 1999, and unevenly between the Entities. World Bank estimates put growth at 62% in the Federation and 25% in Republika Srpska in 1996, and at 35% in the Federation with no growth in Republika Srpska in 1997.

Most of the conglomerates were later privatised. RMK Zenica passed to ArcelorMittal. Other privatised factories went the other way: owners cut wages or stopped paying them, and some factories were dismantled by the people who had bought them.

What Bosnia and Herzegovina makes and sells

The Agency for Statistics published its first results for 2025 on 28 July 2026. Gross domestic product was 58,171 million marks, 8.2% more than in 2024 in nominal terms and 2.4% more in real terms. Per head that came to 17,099 marks, 8,743 euros or 9,857 US dollars, divided by a mid-year population estimate of 3,402,000. The World Bank's figures for the same year are 32.6 billion dollars in total and 10,382 dollars a head. The totals sit about 3% apart and the per-head figures diverge in the opposite direction, so the two institutions are dividing by different counts of people: the World Bank pair implies about 3.14 million.

Trade and manufacturing together made up 27.8% of output in 2025, and public administration, education and health a further 16.4%. Mining is the line that moved most in money, 23.7% in nominal terms, and least in volume, which is a price effect. Electricity supply shrank 3.3% in real terms in 2025, and accommodation and food service grew 8.2%.

What leaves the country and what arrives

In 2017 exports grew 17% to €5.65 billion against imports of €9.32 billion, so that exports covered 61% of imports, and the main exports were car seats, electricity, processed wood, aluminium and furniture. The main imports that year were crude oil, cars, motor oil, coal and briquettes. In 2018 goods exports reached 11.9 billion marks and imports 19.27 billion. The World Bank's climate profile put exports at 35.4% of GDP in 2020 and imports at 52.3%, and the State Department describes the economy in 2025 as tied closely to European value chains and exporting goods far more than services.

About 10.7 billion dollars of direct investment entered between 1994 and 2024. Austria, Croatia, Serbia, Slovenia and Germany together held 61% of the stock, and 38.6% of the total went into production, 19.2% into banking, 14.3% into wholesale trade and 11% into telecommunications. Annual inflows rose from about 500 million dollars in 2018 to 1.1 billion in 2023.

Why coal and rivers power Bosnia and Herzegovina

The power system rests on two domestic resources. In 2018 installed capacity was about 2,076 megawatts of hydropower, 2,065 megawatts of lignite-fired plant, 159 megawatts of small hydropower, 51 megawatts of wind and 18.15 megawatts of solar, according to the World Bank's climate risk profile. Generation runs at about two thirds coal to one third hydropower, and the split moves with rainfall and river flow. Electricity is sold abroad on balance, which is why it appears on the export list beside car seats and furniture.

The lignite comes from five main power plants, which could generate up to 2,065 megawatts in 2021. Generation was liberalised in January 2015, and domestic coal kept its protection. Unit 4 at the Tuzla plant was due to close in 2022, and the government extended its life instead. Unit 5 at Kakanj was also due to close in 2022, under the Energy Community Treaty of 2006. The climate profile notes the high employment in the coal sector as one reason it is expected to remain the main source of electricity, and it doubts the competitiveness of coal plants on an open market.

Wind and solar are recent. The first wind farm, the 50.6-megawatt Mesihovina plant in Herzegovina, financed by Germany's KfW, began operating in March 2018. A renewable energy target of 34% was set in 2016, and the plan to 2030 provides for 1.5 gigawatts of solar and 0.5 gigawatts of wind, with several coal stations to close or convert to biomass. The economy article records that artificially low power prices have given consumers little reason to save energy.

Electric power transmission is the one sector the investment law shuts to foreign capital entirely, and generation is held by government-owned companies that the State Department describes in 2025 as near-monopolies able to influence regulators and courts.

How the Entities divide the Bosnian economy

The Dayton constitution left most economic law with the Entities, and the result is a single currency area with several rulebooks. Bosnia and Herzegovina is divided into three jurisdictions for direct tax: the Federation, Republika Srpska and Brčko District. Corporate income tax has been harmonised at 10% across all three, and value added tax is set once for the state at 17%, collected by the Indirect Taxation Authority from its headquarters in Banja Luka. Almost everything a company pays or files beyond that depends on where it stands.

Brčko District received the remaining 1.3% of the investment. The minimum wage rises were steep: the Republika Srpska rise from 700 to 900 marks in January 2024 was 29%, and the Federation rise of January 2025 was 61%. Each Entity runs its own pension and health care system, and the two are not harmonised, so a company working in both follows two sets of rules on employment, wages and contributions. There are 143 municipalities, 80 in the Federation and 63 in Republika Srpska, each with its own regulations on business.

Who supervises the banks and the stock exchanges

Banking supervision and licensing belong to the Entity agencies, and a bank can register in either Entity or both. Twenty-one commercial banks operated in April 2025, some of them branches of the same bank on either side, and about 75% were foreign owned. The non-performing loan ratio was 2.9% in 2024, and deposits stood at 19.1 billion dollars in February 2025, insured at state level up to 70,000 marks. The system was tested in 2022, when sanctions on the Russian financial sector triggered runs on the two Sberbank subsidiaries, which held about 8% of banking assets. The two agencies resolved both banks by sale.

The stock exchanges in Sarajevo and Banja Luka both opened for trading in 2002 and answer to two securities commissions under two securities market acts. Few companies raise capital through them, and most listed shares trade little or not at all. Both Entities first issued government securities in 2011 to finance budget deficits.

Which companies the Entities and towns still own

There is no state-owned enterprise at the national level. There are more than 550 government-owned enterprises below it, employing an estimated 80,000 people in 2025, or 11% of total employment. All four international airports, at Sarajevo, Tuzla, Mostar and Banja Luka, are government owned and operated. Privatisation has stopped on both sides. The Federation Agency for Privatisation had its bank accounts blocked and its workers on strike over salaries unpaid since March 2022, and in Republika Srpska announced sales of state holdings in 22 companies in 2016 and in 59 in December 2022 were never carried out.

Why unemployment in Bosnia and Herzegovina has two rates

Two unemployment rates are published and they measure different things. In January 2025 registered unemployment, as reported by the statistics agency, was about 28%. The rate on the International Labour Organization's definition, which takes account of unregistered workers in the grey economy, was about 11.7%. The World Bank's modelled estimate for 2025 is 11%. The gap has a known mechanism: registration brings benefits, including state health insurance, and the State Department reports that people working informally keep receiving them, while employers underreport their workforce to avoid taxes and contributions.

Earlier figures sat higher. The rate given for 2017 was 20.5%, and the World Bank's climate profile gives 18.4% for 2019. Youth unemployment was 31.4% on the 2025 figures, and the World Bank reports that 40% of adults in 2025 said they could not cover their expenses for more than a month if their main income stopped.

Mandatory contributions on labour are the other half of the explanation. A worker's gross wage in the Federation carried 41.5% in social security contributions and 10% in income tax in early 2025, and that is the burden the underreporting avoids.

How emigration and remittances fund the trade gap

The trade deficit is paid for from abroad. The State Department estimated in 2025 that remittances from the diaspora amount to as much as 15% of GDP, and that about 50,000 people leave the country each year. The diaspora also returns in person: emigrants coming home for the summer months raise retail sales and restaurant takings. The State Department's report notes that a slowdown in the European Union would cut into those transfers as well as into export demand.

The departures show in the population counts. The World Bank's climate profile put the population at 3.3 million in 2020 and projected 3.1 million by 2030 and 2.6 million by 2050, and the World Bank records population growth of minus 0.8% in 2025. Construction, information technology and health care have lost skills to emigration, and by 2025 employers were bringing in workers from Türkiye and South Asia for agriculture, construction and hospitality, under quotas and a work permit process that can take six months in the Federation.

The World Bank sets these figures against the pace of catching up. Growth has held at around 3% a year and real income has grown about 3% a year since 2015, which left GDP per head at one third of the European Union average in 2024. At that rate, the World Bank calculates, reaching European Union living standards would take more than a hundred years.

What European Union candidacy asks of Bosnia and Herzegovina

Bosnia and Herzegovina became a candidate for European Union membership in 2022, and in March 2024 the European Council agreed to open accession negotiations on condition that further steps were met. Alignment of legislation with the body of European Union law is under way. The State Department's report of 2025 expects the reforms tied to it to simplify regulation and cut the fees businesses pay at Entity, canton and municipal level, and records that basic reforms had stalled.

Accession to the World Trade Organization is also in progress, but the working party handling it has not met since 2018, and the country is outside the organisation's Government Procurement Agreement. The World Bank's partnership framework for 2022 to 2026 made up to 750 million dollars of new lending available, tied to reform.