The official currency is the convertible mark (BAM), but I saw some mentions that the euro is accepted in Bosnia as well.
How widely can you pay with euros? In restaurants, hotels, bars, public transport, taxis, and so on.
The useful World Travel Guide (WTG) currency information for Bosnia and Herzegovina says that, yes, some Euro notes are widely accepted. In my experience, that means denominations greater than 20€ (i.e., 50€ or 100€) are more difficult to use, unless being exchanged or getting smaller value bills (e.g., in a bank). Added emphasis mine.
Bosnia and Herzegovina Konvertibilna Marka (BAM; symbol KM) = 100 feninga. Notes are in denominations of KM200, 100, 50, 20, 10, 5 and 1 and 50 feninga. Coins are available in denominations of KM2 and 1, and 50, 20 and 10 feninga. Some Euro notes (but not coins) are widely accepted.
Credit cards are generally accepted in top hotels and restaurants, and some gift shops. ATMs are becoming increasingly common in cities like Sarajevo, Mostar and Banja Luka, and even smaller towns. However, an emergency supply of cash is still advisable.
ATMs are becoming increasingly common in cities like Sarajevo, Mostar and Banja Luka, and even smaller towns.
Bosnia and Herzegovina is mostly a cash-only economy and traveller's cheques are exchanged only at select banks.
The import and export of local currency are limited to KM200,000. There are no restrictions on the import and export of foreign currencies.
The Euro and US Dollar are the preferred foreign currencies. The Pound Sterling is rarely used. Some shops will accept Euro cash for payment on a 2KM = 1 Euro basis.