Cash payments must now be made in euros in Kosovo

(MENAFN- Linked Builder Team PVT LTD)

Since February 1, cash payments in Kosovo must be made in euros. This new regulation by the Central bank of Kosovo (CBK), which effectively bans the use Serbian dinar for market transactions, is intended to combat counterfeit banknotes, money laundering and the financing of terrorist activities.

Kosovo adopted the euro on January 1, 2002, in collaboration with the European Central Bank (ECB) and several national central banks in the euro zone, abandoning the use of the German mark. This transition enabled the country to stabilize its currency and rapidly develop its financial sector.

Since then, the Kosovar constitution and the country's Central Bank (CBK) have made the euro the sole official currency for payments via the country's National Payment System (SNP/KIPS).

At the end of December 2023, the CBK went a step further by approving a new regulation, which came into force on February 1, 2024, this time concerning cash-only transactions, with the aim of adopting a more transparent monetary policy. As a result, cash payments can now only be made in euros.

According to Besnik Bislimi, Deputy Prime Minister for European Integration, Development and Dialogue of the Republic of Kosovo, the new regulation "aims to control the quantity and quality of banknotes in circulation; protect the integrity of the country's financial system; and advance and intensify the fight against criminal activities on the financial market, such as terrorist financing, money laundering, the use of counterfeit banknotes and others. There is no doubt that the ultimate objective of the regulation, in addition to implementing the country's monetary policy, is also to protect the consumer and the payment system of the Republic of Kosovo".

Besnik Bislimi points out that non-euro currencies can still be used in the country on bank accounts or as a store of value in physical form, for international payments or foreign exchange activities. "Nevertheless, currency exchanges may only be carried out in the Republic of Kosovo through institutions approved by the Central Bank".

Among the regulation's main innovations are a ban on the recirculation of the 500-euro bill, precise guidelines on the import and export of banknotes denominated in euros or other currencies, and strict criteria for the licensing of operators involved in these activities. In addition, measures are being taken to facilitate the exchange of damaged banknotes, thus ensuring a more efficient and secure monetary system. Kosovar citizens can therefore no longer pay with Albanian leks, dollars or Serbian dinars.

According to the Deputy Prime Minister, the settlement does not specifically concern the Serbian dinar, but rather the management of cash transactions. Serbia can continue to provide financial assistance to Kosovo Serbs. For the sake of transparency, however, payments must be deposited in euro accounts, not in dinars, and cash must be withdrawn in euros before being used. 

Despite some concerns expressed by the international community about the impact on citizens receiving transfers from Serbia, but also on companies carrying out transactions in dinars, the government and the CBK are determined to ensure a smooth transition (one month minimum).

"The government is committed to ensuring that there is as much information and education as possible. The Central Bank of Kosovo must ensure that the citizens of each municipality have access to the country's banking system, which implies a greater presence of commercial banks with their subsidiaries. We need to find, in cooperation with the Central Bank of Serbia, the appropriate mechanism to ensure the transfer of donations that Serbia wishes to send to the citizens of the Serbian community in Kosovo," explains Besnik Bislimi.

Bislimi points out that all pensioners and welfare recipients in Kosovo's Serbian community already have euro bank accounts, demonstrating that the transition to using this currency is feasible. In addition, Kosovar government funds are all disbursed in euros, confirming that salaries in the education and health sectors are paid in this currency.

With regard to concerns about health and education services potentially financed by the Republic of Serbia, it is important to stress that these services are mainly supported by funds from the Kosovar budget, also paid in euros. Thus, the implementation of this regulation should not jeopardize these vital services.

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