Serbia sets up dinar ATMs near Kosovo border

The Post Office Bank of Serbia has opened four makeshift bank branches, Jarinje, Bernjak, Konculj, and Merdare border crossing points, where it says Kosovo Serbs can withdraw payments from the Serbian government, such as salaries and pensions, in dinar.

According to a statement from the bank, each facility is equipped with a Post Savings Bank ATM, where the withdrawal of funds from dinar accounts will be possible at any time.

“In support of citizens, the bank sent two mobile branches with wheels that will be available at these locations according to the citizens’ needs,” the statement said.

It is added that “this technical solution is temporary until the normal operation of payment transactions in Serbian areas in Kosovo is established”.

On 1 February, the Kosovo Central Bank, an entity independent of the government, enforced a regulation stipulating that the euro is the sole currency for payment transactions in the country. This follows the euro being the official currency of the country since 2002 and the Constitution of 2008 stating there is only one legal tender.

Despite this, many Kosovo Serbs, who refuse to accept Kosovo’s 2008 declaration of independence, continue to use the dinar, shunning the euro.

Other currencies, including dollars, pounds, lek, and dinar, will still be allowed in exchanges, specific foreign currency accounts, and informal transactions between individuals.

However, all official payments must be made in dinar, preventing large amounts of physical cash being brought into Kosovo across the border, leading to concerns about organised crime and traceability of funds.

In the last month, Kosovo police prohibited the entry of physical dinars from Serbia on several occassions, arguing that it was banned under the Central Bank rules.

Meanwhile, in a bid to allow Kosovo serbs to adjust, the Kosovo government has enforced a three-month transition period for the rules to take effect.

Kosovo Prime Minister Albin Kurti has clarified that the dinar is not prohibited, despite Serbia claims and many incorrect media reports, and has encouraged Serbs to join the country’s banking system.

He said the central bank has offered the People’s Bank of Serbia facilities for converting dinars into euros and has assured free euro bank accounts for any Kosovo Serbs. Dinars can be paid into these accounts and then withdrawn in euros, the official legal tender, the government said.

“Aid to the Serbian community, sent by the government of Belgrade, received in euros and registered through the bank account can be received for transparency and establishing legality. In this way, the amount of money sent from Belgrade will exactly match the money you receive in Kosovo,” he said in mid-February.

At the United Nations Security Council meeting in February, Kurti also responded to allegations from Serbian President Aleksander Vucic that the ‘ban’ was an attempt at ethnic cleansing.

“The central bank’s regulation does not prohibit Serbia from providing financial support. Any suggestion otherwise is false propaganda aimed at inciting ethnic tensions.”

The prime minister continued that the decision to regulate how foreign currency enters the country aligns with national law and international and EU best practices on preventing financial crime. He said it would stop illicit funds from being brought physically over Kosovo’s border and used by criminal structures.

“Belgrade’s hysteria over the central bank regulation stems from the imminent halt to its illegal cash pipeline into Kosovo, not concerns for Serbian citizens’ welfare,” he added.

The decision of Kosovo’s central bank has raised the ire of the European Union and the US, who have called for it to be suspended over fears it will exacerbate already fragile ethnic tensions.

The US Envoy for the Western Balkans, Gabriel Escobar, will be in Pristina this week to discuss the ongoing dialogue with Serbia and the issue of the dinar.

The State Department said, “His visit will re-emphasise the United States’ commitment to the countries of the Western Balkans, which aim at Euro-Atlantic integration and deeper regional cooperation.”

Last month, Escobar said that the government of Kosovo is not treating the USA as a partner because it has not listened to the American request on the issue of the Serbian dinar.

“We are very worried because the Government of Kosovo is not treating us as a partner, they do not work with us for regional stability and undermine the dialogue, a process to which the US is fully committed”, Escobar said.

(Alice Taylor | Euractiv.com)