Kosovo will only accept the euro within its borders, a decision that has sparked fears of renewed flare-ups with Serbia as Serbs in the north of the country insist on using Serbian dinars, while the EU called on both sides to avoid any further escalation.
Last week, the Kosovo Central Bank announced that as of 1 February, a Regulation of Cash Operations will enter into force. Aiming to fight counterfeit money and other forms of financial crime, it specifies that the euro is the only currency allowed for cash and digital payments in the country.
The regulation continues that other non-euro currencies can be used only as valuables for safekeeping in physical form, in non-euro bank accounts, or for foreign exchange purposes.
Kosovo adopted the euro in 2002, shortly after the 1998-1999 Kosovo war and six years before it unilaterally and formally declared independence from Serbia. The country’s constitution underlines that Kosovo has “one single currency”, but some Serb-majority municipalities use dinars.
In addition, Serbian banks in Kosovo, Kosovo Serbs receiving pensions from Serbia, and employees of institutions that are still part of the Serbian system, such as schools and hospitals, also use only dinars. Payments in shops and cafes are also made in dinars in Serb-majority areas.
Serb List, the country’s main Serb political party, whose former deputy leader Milan Radojicic recently resigned after admitting to leading the 24 September EU-dubbed “terrorist attack” in Banjska, has come out in opposition to the decision.
They claim it would amount to the “expulsion of Serbs without the use of weapons” and said it “directly threatens the physical survival of the Serbian people.”
EU spokesperson Peter Stano said the EU Commission is analysing Kosovo’s decision and seeking clarification.
“We are still analysing and seeking explanations about this decision, the reasons for its adoption, motivations, and possible implications. In general, Kosovo and Serbia are expected to avoid uncoordinated actions that are not conducive to the normalisation of relations, and that could have a negative impact on stability on the ground,” Stano said at a press briefing in Brussels.
The exclusive use of the euro is in the Kosovo constitution, so the regulation simply lays down its enforcement. Furthermore, the central bank clarified that voluntary transactions between parties using non-euro currencies fall outside the regulations remit.
Stano called on both sides to address the issue within the framework of the EU-facilitated dialogue. However, the matter of Kosovo’s official currency, established over 22 years ago, is not included in the talks.
Serbian President Aleksander Vucic has condemned the decision, stating, “We will use all available means against the banning of the dinar in Kosovo”.
This is even though the dinar has not been banned and can still be exchanged and held in non-euro bank accounts along with other currencies such as the Albanian lek and US dollar. Furthermore, those using the dinar should simply exchange it for the euro as the dinar is pegged to the euro, meaning there will be no monetary loss.
Vucic has also called on EU Commission President Ursula von der Leyen to use her authority to prevent the implementation of the new rule, according to a statement he gave to state-run broadcaster RTS.
Throughout Europe and the rest of the world, the state decides what currencies can be used within a country and which are the official or de facto currencies.
Currently, 20 European countries use the euro, along with Andorra, San Marino, Monaco, and Vatican City, and several candidate countries, such as Albania and North Macedonia, widely accept it.
Relations between Kosovo and Serbia have simmered over the last year following the injury of 30 NATO soldiers in May 2023 as Serbs protested as ethnic-Albanian mayors tried to enter municipal facilities after winning local elections that Serbs boycotted.
Then, in September, Serb militia killed a Kosovar police officer and sought refuge in a monastery, engaging in a shootout with authorities. A significant haul of weapons and ammunition was found by the Kosovo police following the attack.
Meanwhile, over the weekend, Germany announced it would increase its military presence under KFOR in the north of Kosovo due to the deteriorating security situation.
From the 80 German soldiers stationed in Kosovo, the number will increase to 300, including support staff. The contingent is expected to land in the spring.
(Alice Taylor | Euractiv.com)
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