The official currency of Bosnia and Herzegovina is the convertible mark, a decimalized currency that can be subdivided into 100 fenings. The name of the currency is borrowed from the former currency of Germany, the mark and pfennig, to which the convertible mark was pegged at its introduction. The Convertible mark was introduced in 1998, three years after the Dayton Agreement established Bosnia and Herzegovina as a unified country. Both political entities of the country had formerly belonged to the Republic of Yugoslavia, but had been fighting for control of the region for over three years after the dissolution of Yugoslavia. The convertible mark was introduced pegged to the German mark at a ratio of 1 mark: 1.95583 BAM. When Germany converted their currency in 2002, this same pegged ratio was maintained with the euro, which is usually written as 1 BAM: 0.51129 EUR.
The Central Bank of Bosnia and Herzegovina was established in 1997 to maintain monetary stability in the country. The Central Bank is responsible for the issuance of currency and for implementing the monetary policy of the country as determined by the Currency Board. The Central Bank also supports domestic payment and settlement systems and coordinates the activity of the bureaus responsible for bank licensing and supervision, the BH Entity Banking Agencies. The Governing Board of the Central Bank of Bosnia and Herzegovina is composed five persons, all of whom are appointed by the President. The chair is chosen among the five members and determined by an internal vote. The members serve for a term of six years.
The first convertible mark currency circulated in the form of coins and banknotes, which were both issued in 1998. The first copper-plated steel coins were issued in denominations of 10, 20 and 50 fenings. Nickel-plated steel coins of 1 mark and bimetallic coins of 2 marks were issued in 2000. In 2006, the 5-mark bimetallic coin was put into circulation. Banknotes were printed in two different versions: one for the Federation of BiH and one for the Republic of Srpska. Banknotes were originally in denominations of 50 fenings and 1, 5, 10, 20, 50 and 100 marks. In 2002, a 200-mark note was added, and in 2003, the 50-fening note was removed from circulation. The 5-mark note was later removed from circulation in 2010.