Sarajevo, 1 December 2010
In the speech titled „Human development and wealth distribution“ which was held on the 1st of
November, the Director of the International Monetary Fund (IMF), Dominique Strauss-Kahn, spoke of
what the people from this area of the world knew and did 30 years ago: unjust wealth distribution
within countries causes imperfections in the market and undermines the social and economical
development and safety.
From the best to the worst
Unfortunately for the vast majority, or fortunately for the very few, after years of material
devastation and over a houndred thousend lost lives, Bosnia and Herzegovina's path of economical
and social recovery did not include equality and high rates of employment as reliable indicators of
From the most integrated area of Europe, we became the most disintegrated. From the population
with the highest level of happiness in Europe, we today represent the most unhappy, all of
which have common reasons: nationalism and migration. In the early ’80-ties we had almost 0%
unemployment, and from that we came down to having almost half the population unable of finding
a job. From being able to provide housing solutions to everyone, we now have a situation in which
every 10th young man can squire himself a home.
We all know that the system does not work, but what we do not know is who is to blame. The
solution might be in Strauss-Kahn’s last speech, which states that the financial sector is in the very
centre of the crisis, it states that banks must accept the real sector as their grandmaster and that
banks must start providing money to create jobs if we wish to stop a total collapse. In Bosnia and
Herzegovina’s case, that would mean that banks must cut loose their credit-potentials and start
providing the economy and general population with interest rates up to 3%. Will they?
Will they enable the young man to pay 280 KM per month for an apartment instead of 880 KM?
Selling the country for one billion marks
Our banks will claim that is impossible, that they have risks and high compensations for the money
loaned from their mother-banks from abroad. The truth is that the money given by the mother-banks
was never invested in Bosnia and Herzegovina’s economy. That money was by direct (overnight
transactions) or indirect means (central bank’s reserves) transferred out of the country.
The neto value of foreign banks’ investments is slightly more then 1 billion KM – that is the credit
difference which was divided among the banks (14 billion KM) and the means which our citizens,
companies and public institutions own in the banks (12.7 billion KM).
We have sold our own country for a bit more then 1 billion KM, thus allowing ourselves to be ruled
by from the outside.
Vuk Bačanović, co-author of this economic model
For their services, banks charge us by means of interest rates and provisions. These charges grow by
the year and in 2009. have reached 2 billion KM.
Two billion marks which by direct (interest rate) or indirect (import) leave the country for good.
Two billion marks are equal to 40% neto value of every salary ever earned in the year 2009. In Bosnia
Governments around the world get taken down when the interest rate grows above 4-5%, but our
population has accepted 10% as our reality and that it cannot change.
Foreign banks will not put lower interest rates lower
Luckily, overcoming debt imbued slavery and achieving sovereignty is possible. The solution lies
again in IMF director’s hands, within the same institution whose past advice helped broaden the
gap between the rich and the poor. Our solution is to recline on our own strength, and not to wait
for someone else to solve our problems. Foreign banks will not lower their interest rates below 3%,
which is mandatory for our economy to recover after 15 years of constant torture.
Fighting corruption is not enough, we need a complete redesign of the banking system, which
will systemically disable corruption and which will create thousands of jobs. We urgently need
to de-capitalise our banks and turn them into industrial-commercial banks, enabling them to
create money/loans out of the deposits and divisions within local banks meant to supply the local
population and industrial banks meant to supply public and private companies.
Public banks – safe heaven!
Local banks would lend low interest rate consumer loans to the general population. The poorest
would have 0% interest rate loans (which means that instead of paying 880 KM for a 1000 KM
apartment, they would pay 280 KM), while the richer population would have loans with an interest
rate 0 – 5%. The only condition required to gain 0% interest rate loans is to spend the saved amount
(880 KM – 280 KM = 600 KM) on domestic products or services or to invest that money into a local
business. Any income above the monthly rate which, in the current system, would belong to foreign
banks can be spent freely.
Cheap loans would be distributed among young people right away in order to make the young
people valid buyers for thousands of already built apartments through out the country. The need to
pay 10% interest loan per month (or 880 KM) is no more. A monthly rate of 280 KM is something the
majority could accept.
Economic/public banks would, as a part of development banks, approve cheap loans to public and
private companies, the goal of which would be to hire as much people as possible.
In order to acquire cheap loans, just like the individual, the company must retain the saved sum
within Bosnia and Herzegovina or generate export. In other words, not to leak money out of the
country by importing. However, importing the necessary technology from abroad would be financed
while maintaining interest rates at ~50% of what current commercial banks. The collaterals would
remain to insure loans got paid.
Development banks that exist in our country now, are not the solution. For, without solving
consumer problems and without retaining the amount consumers save with these new loans inside
Bosnia and Herzegovina, money would – as it has so far – simply leak out, thus not allowing us to
create permanent jobs.
Forming an industrial-commercial bank which would provide cheap loans enables jobs, creative
business, housing loans, highways, modern hospitals, schools – all of that, and more, without
Establishing this system would unleash unimaginable creative energy, and our employers – whom we
can call magicians, because they survive in an impossible environment – would be able to create new
jobs, they could rise the average salary and improve the working conditions of their workers.
An army of new employers would join them with equally creative ideas which could not have been
brought to life if we had continued to maintain a central planing economy, led by banko-financial