The Konvertibilna Marka was introduced in June 1998 as part of the post-Dayton monetary architecture imposed on Bosnia and Herzegovina, replacing the Bosnian Dinar at a rate of 100:1. Crucially, the new currency was pegged to the Deutsche Mark at par — and when Germany adopted the euro in 2002, the peg transferred automatically to the euro at the fixed DM conversion rate, a transition Bosnia never formally legislated but simply inherited.
The currency board arrangement underpinning it, administered by the Central Bank established in 1997, legally prohibited the bank from acting as a lender of last resort — an unusual constitutional constraint written directly into the Dayton-derived banking law to reassure creditors and prevent inflationary policy by any of the three constituent peoples.
The Konvertibilna Marka was introduced in June 1998 as part of the post-Dayton monetary architecture imposed on Bosnia and Herzegovina, replacing the Bosnian Dinar at a rate of 100:1. Crucially, the new currency was pegged to the Deutsche Mark at par — and when Germany adopted the euro in 2002, the peg transferred automatically to the euro at the fixed DM conversion rate, a transition Bosnia never formally legislated but simply inherited.
The currency board arrangement underpinning it, administered by the Central Bank established in 1997, legally prohibited the bank from acting as a lender of last resort — an unusual constitutional constraint written directly into the Dayton-derived banking law to reassure creditors and prevent inflationary policy by any of the three constituent peoples.