The state of Bosnia and Herzegovina was part of Yugoslavia until 1992 when it declared independence. The Bosniaks, the Croats, and the Serbs are the three main ethnic groups living in the country. Bosnia and Herzegovina achieved its indepedence after years of bitter armed conflicts that left thousands dead. The relationship between the three ethnic groups is still fragile. The Dayton Agreement that sealed peace and coexistence in the country also abolished the use of the Croatian Kuna, Bosnia and Herzegovina dinar, and the Republika Srpska dinar in the country by establishing the Bosnia and Herzegovina convertible mark (BAM) that would be the official currency. The BAM was pegged to the German Mark at par and divided into 100 pfennigs. Although it was introduced in 1995, the currency began circulating in 1998. BAM circulates both the banknotes and coins. The BAM coins circulate in higher denominations (mark) and lower denominations (pfennigs).
Coins and Banknotes
BAM coins were introduced in 1998. The lower denominations are the 10-, 20-, and 50-pfennigs while the higher denominations are the 1 mark, 2-, and 5-marks. The coins were designed by Kenan Zekic of Bosnia and minted by the Royal Mint. BAM notes of 50-pfennigs and the 1-mark, 5-, 10-, 20-, 50-, and 100-marks were introduced in 1998. In 2002, the 200-mark note was introduced while the 50-pfennigs, 1- and 5-mark notes were withdrawn. Distinct notes are issued for the Republika Srpska and the Federation of Bosnia and Herzegovina except the 200-mark note. The BAM banknotes lack consistency in their physical appearance and are thought to possess the largest number of inconsistencies of the global banknotes.
Impacts of BAM on the National Economy
Bosnia and Herzegovina had an economy that was not equally distributed across the country. The economies varied based on the region settled by the ethnic groups. Since the end of the Bosnian War, the economy has been growing at a significant rate and the country has been paying off its national debt although unemployment remains the greatest challenge. The industry sector that suffered the most during the war is regaining its status as the backbone of the economy while the manufacturing, telecommunication, and banking industries have benefited the most from foreign investment. Bosnia and Herzegovina is currently a candidate for European Union membership.