EU Office in Kosovo and US embassy in Serbia both express concern about new regulation on the euro as Kosovo’s only official currency – and how it will affect Serb-majority areas that still use the Serbian dinar.
The EU and US have expressed concern over the timing of the enforcement in Kosovo of a regulation reinforcing the euro as the only official currency, especially in Serb-majority municipalities that use Serbia’s dinar on a daily basis.
The Kosovo Central Bank regulation is designed mainly to fight the flow of counterfeit money.
After a meeting with Bank Governor Ahmet Ismaili, the EU Head of Office in Kosovo, Tomas Szunyog, wrote on X on Tuesday that they had discussed “the amended regulation on Cash Operations, which also regulates the process of handling and withdrawal from circulation of euro banknotes and coins and other currencies suspected of being counterfeit. Inquired how it will be implemented, as it is expected to particularly affect the livelihood of the citizens in the Serb-majority community areas. Expressed concern about the fact that there is very little time for adaptation before the regulation enters into force.”
A bank press release issued after the meeting defended the regulation, saying it “aims to adopt the best practices of the European Union regarding preserving the integrity of the Euro currency and the financial system, the fight against false money, money laundering, and terrorism financing and informality”.
Serbia’s public broadcaster RTS, on Tuesday, reported the US Ambassador to Serbia, Christopher Hill, as saying that “unnecessary surprises and unilateral acts should be avoided” at this stage of the Serbia-Kosovo dialogue.
“The most important thing now is the formation of the Community of Serbian Municipalities, but also that Kosovo is enabled access to international institutions. One should focus on that and avoid topics that are not of common interest,” Hill said, when asked about the regulation.
The formation of an association of Serb-majority municipalities with autonomous powers is a longstanding demand of the Kosovo Serbs and of Serbia itself.
A US State Department spokesperson was quoted on Tuesday as saying that they “urge the Government of Kosovo to revisit this decision, consult with the affected communities, respond to the concerns expressed by the international community, and provide ample time for its decisions to be implemented to mitigate the impact those decisions will have on its citizens”, adding that “we are concerned that regulation adopted on December 27 will negatively impact the ethnic Serb community in Kosovo.”
Kosovo authorities insist the new regulation only emphasizes existing laws. Naim Hajra, Kosovo’s Chief Market Inspector, told BIRN that “the issue was already regulated to some extent, the euro has [long] been the only currency in Kosovo”.
Kosovo’s constitution defines the country as using “one single currency”. Kosovo has been using the euro since 2002, but people in Serb-majority municipalities, especially in the north, use both Serbian dinars and euros.
The Regulation on Cash Operations that enters into force on February 1 aims to fight counterfeit money and reiterates: “The only currency allowed to be used for carrying out cash payment transactions and in the payment system in the Republic of Kosovo is the euro.”
“Other non-euro currencies can be used … only as valuables for safekeeping in physical form, or in bank accounts in non-euro currencies, for making international payments in non-euro currencies and for foreign exchange activities,” it adds.
On January 18, one day after the publication of the regulation, Kosovo Deputy PM Besnik Bislimi on Facebook wrote that the Central Bank did not need to ban the dinar, as it was never allowed in the first place.
Hajra, from the market inspectorate, told BIRN that it was hard to specify compliance in Serb-majority municipalities in the north “because the circumstances there for inspections have been more difficult”.
“We have made periodic inspections. If the inspectors have gone to a certain store, for example in Gracanica or Shterpce/Strpce, they have taken care to see if the euro is used as the official currency”, and been fined accordingly, Hajra told BIRN.
The authorities have issued no official instructions on how to proceed with the full implementation of this regulation as yet.
Source: Balkan Insight