Pyramids and Currency Boards

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Some of you might have heard of the first European pyramids being excavated in Bosnia. It is a country with a rich history and more recently seen as a successful model of post-conflict reconstruction.

It’s in a way very true; the Clinton administration effectively wrote their constitution. Sebastian Mallaby notes in ‘The World’s Banker’, the economic parts of the constitution was written by a team led by a World Bank staff Christine Wallich. Mallaby suggests that if not for the financial aid promised by the World Bank, the peace deal at Dayton would never have come about.

There constitution is really unique, parts relating to the Central Bank are quoted below;

"1.The Central Bank's responsibilities will be determined by the Parliamentary Assembly. For the first six years after the entry into force of this Constitution, however, it may not extend credit by creating money, operating in this respect as a currency board; thereafter, the Parliamentary Assembly may give it that authority.

2.The first Governing Board of the Central Bank shall consist of a Governor appointed by the International Monetary Fund, after consultation with the Presidency, and three members appointed by the Presidency, two from the Federation (one Bosniac, one Croat, who shall share one vote) and one from the Republika Srpska, all of whom shall serve a six-year term. The Governor, who shall not be a citizen of Bosnia and Herzegovina or any neighboring state, may cast tie-breaking votes on the Governing Board."

For Comment; Could the Bosnian approach (Clinton administration using the World Bank and other development agencies as a tool of enlightened foreign policy) have worked in the case of Iraq?

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People have pointed out to me that one reason for the success of Bosnia has been, the hope of one day joining the EU and in terms of economic governance the current constitution is a hindrance.


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This page contains a single entry by Paul published on May 13, 2006 9:23 PM.

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