Euro Becomes Sole Legal Tender in Kosovo Amid Tensions

Kosovo's Central Bank regulation enforcing the euro as the only legal currency takes effect, despite Serbian dinar still being used in northern Kosovo. A Brussels meeting is scheduled to address the issue and find a resolution for affected communities.

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Nitish Verma
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Euro Becomes Sole Legal Tender in Kosovo Amid Tensions

Euro Becomes Sole Legal Tender in Kosovo Amid Tensions

The Central Bank of Kosovo's regulation enforcing the euro as the only legal currency in the country has taken effect, despite the Serbian dinar still being widely used in northern Kosovo. The move comes ahead of the Brussels dialogue on the issue, which is expected to address the ongoing use of the Serbian currency in Serb-majority areas.

Why this matters: The currency dispute has significant implications for the region's economic stability and ethnic relations, potentially exacerbating tensions between Kosovo and Serbia. A resolution to this issue could set a precedent for other countries with disputed territories and currencies.

As of May 12, 2024, all cash transactions anywhere in Kosovo must be carried out in euros, replacing the Serbian dinar as the accepted currency. The transition period for businesses to adapt to the regulation ended on May 12 or 13, according to conflicting reports from Pristina-based media. The regulation, passed in December 2023, effectively bans the use of the Serbian dinar in Kosovo.

The decision has been criticized by Belgrade, which alleges that Pristina wants to abolish the dinar and payment transactions with Serbia. International officials have also expressed concern about the impact of the regulation on Serbian schools, hospitals, and citizens who work in institutions operating under the Serbian system. Despite calls to suspend the regulation, Pristina introduced a transitional adjustment period, which has now ended.

During the transition period, an information campaign was carried out, but no concrete actions were taken to address the concerns of the Serbian community. Deputy Prime Minister Besnik Bislimi stated, "The citizens of Serbian ethnicity have no reason to worry." However, the dinar is still in circulation in northern Kosovo, and businesses in the region are still using both euros and dinars.

Kosovo unilaterally adopted the euro in 2002, despite not being a member of the European Union or its currency zone. The move aimed to simplify and reduce transaction costs but raised concerns among ethnic Serbs in Kosovo who have been using the Serbian dinar. Ethnic Serbs, estimated to be around 120,000, have been able to make payments in dinars or withdraw dinars from Serbian-based banks in 10 of Kosovo's 38 municipalities where they represent a majority.

The European Union has urged Kosovo to allow an extended implementation period to avoid complicating the lives of ethnic Serbs. EU spokesman Peter Stano expressed the bloc's concern, stating, "The short transition period for the regulation's implementation, combined with a lack of information and practical solutions for all affected communities, risk seriously complicating their lives."

The currency issue has sparked tensions between Kosovo and Serbia, with Serbian President Aleksandar Vucic holding talks with the Russian ambassador in Belgrade to find a solution. The dominant Serbian party in Kosovo, Serbian List, has accused Kosovar policymakers of trying to achieve the expulsion of Serbs without the use of weapons. The Central Bank of Kosovo has justified the move, citing its legal obligation to regulate the financial system, especially the currency, which has remained unregulated for a long time.

As the regulation takes effect, the situation in northern Kosovo remains tense. Veton Elshani, deputy commander of the Kosovo Police for the North region, stated, "Until now, we have not received any directive." A new meeting is scheduled in Brussels on May 13 to discuss the issue and find a resolution that addresses the concerns of all affected communities in Kosovo.

Key Takeaways

  • Kosovo's Central Bank enforces euro as sole legal currency, replacing Serbian dinar.
  • Regulation aims to simplify transactions, but sparks tensions with Serbia.
  • Ethnic Serbs in Kosovo still use dinars, despite euro adoption in 2002.
  • EU urges extended implementation period to avoid complicating lives of ethnic Serbs.
  • Brussels meeting scheduled to address concerns and find a resolution.