The convertible mark

What the currency board lets the central bank do

The Central Bank of Bosnia and Herzegovina issues the mark under the rules of a currency board, which the Law on the Central Bank sets out. Every issue of notes and coins since 1998 has followed those rules. The same law guarantees that the mark can be converted into euros in full.

The guarantee has been tested. During the global financial crises, the Covid-19 pandemic and the market turmoil that followed the war in Ukraine, demand for cash rose, and the bank supplied commercial banks with enough marks and enough euro banknotes to meet every withdrawal. By law, payments inside Bosnia and Herzegovina are made in convertible marks only.

How the mark inherited a German rate

Before 1998, cash payments in the country ran on several currencies at once, and the central bank describes winning space for its own money as hard work. The new mark was pegged to the Deutsche Mark at par. When the euro replaced the German mark in 2002, the convertible mark kept the German currency's fixed rate, 1.95583 marks to the euro.

Cash in circulation outside the monetary authorities came to KM 162 million at the end of 1998. By June 2023 it had reached KM 7.5 billion.

Why the banknotes come in two designs

The country has two entities, the Federation of Bosnia and Herzegovina and Republika Srpska, and the banknotes follow them. Each version carries its own portrait on the front and its own motif on the back. The Federation notes print Latin before Cyrillic and the Republika Srpska notes reverse the order. Size, colour and security features match exactly, and both circulate everywhere in the country. The central bank says the two versions came into equal use soon after launch.

Two exceptions were shared from the start. The KM 1 and KM 5 notes carried the writers Ivan Franjo Jukić and Meša Selimović, by consensus between the entities, from 1998 to 2010. The KM 200 note, designed by Robert Kalina and issued on 15 May 2002, has a single design, with a bridge on the back meant to recall the euro notes he also drew.

Which notes and coins have been issued

The first notes, of 50 fenings, KM 1, KM 5 and KM 10, came out on 22 June 1998, and the KM 20, KM 50 and KM 100 followed on 27 July. Oberthur in France printed that first issue, and the French government paid for it. Coins began on 9 December 1998 with 10, 20 and 50 fenings, minted by the Royal Mint. The KM 1 and KM 2 coins arrived on 31 July 2000, and the 5 fening and KM 5 coins on 5 January 2006.

The 50 fening, KM 1 and KM 5 notes were later withdrawn and coins took their place. Five note denominations and seven coin denominations circulate. The coins have one design for the whole country.

How pfenig turned into fening

The official gazettes named the hundredth the pfenig, a loan from the German Pfennig. Speakers found the pf cluster hard to say and dropped the p almost at once. The coins were engraved fening, and the spelling took such hold that it became the official name. The central bank writes fenings in English.

The notes carry other slips. The 50 fening note called the pfenig convertible, although only the mark is. A KM 1 note for Republika Srpska misspelled the name of Ivo Andrić in Cyrillic and was withdrawn at once. In 2017 an archaeologist in Sarajevo found that the stećak tombstone on the Federation's KM 10 note came from a different necropolis than the one named, and the central bank confirmed the error.