Economists for RFE: The abolition of the Dinar failed to achieve its goal, decision was rash and political

The regulation by the Central Bank of Kosovo requiring financial transactions to be conducted exclusively in euros has not achieved its goal, as Serbia's currency, the dinar, remains in circulation in Serbian communities in Kosovo, and funds from Serbia's budget have not been converted into euros, says Mejdi Bektashi, a professor of economics at the University of Pristina, for RFE.

"This regulation was a rash decision. A political decision by this government," he stated, adding that the issue of abolishing the dinar should have been resolved through dialogue for normalizing relations between Kosovo and Serbia, with EU mediation.

Bektashi emphasized that even a year after the regulation's adoption, there is still no agreement on transferring funds to give the Central Bank of Kosovo access to these resources.

Kosovo Needs a Currency Law

Ahmet Ismaili, Governor of the Central Bank of Kosovo (CBK), commented on this regulation during the annual conference at the end of December, stating that it had a "positive impact" on the entire financial sector by promoting the "unification of the sector and curbing illegal financing."

The regulation, which bans payments in currencies other than the euro – including the dinar – was adopted at the end of December 2023 and came into effect on February 1, 2024.

Members of the Serbian community, who receive various incomes in dinars from Serbia's budget, reacted strongly to this regulation, which was also criticized by the international community for potentially having negative effects on minority communities.

Professor Bektashi stated that the only change this year is that citizens of the Serbian community in Kosovo now have to travel to Serbia to collect their incomes in dinars.

"The transitional period needed to make sense, for the Central Bank of Kosovo and the National Bank of Serbia to reach an agreement on converting dinars into euros and ensuring cash flow for pensioners and others receiving payments in dinars," Bektashi explained.

The National Bank of Serbia insisted that the issue of the dinar be addressed as part of the dialogue, which Kosovo generally rejected, claiming it was an internal matter.

What Is the Reality on the Ground?

Petar, from North Mitrovica, works for one of the institutions closed by Kosovo, claiming they operated "illegally" under the Serbian system. In an interview with Radio Free Europe, he said he is currently not working but continues to receive his salary.

"My salary is transferred to an account in dinars. Perhaps this should also be resolved so that salaries are somehow converted and received normally in euros in Kosovo, through banks like NLB or Raiffeisen Bank, which are in our city," Petar said.

He added that "neither side seems to care about people going through these difficulties."

The Central Bank of Kosovo confirmed that banning financial transactions in dinars does not prohibit the payment of income from Serbia's budget but requires that such payments be exclusively in euros to allow for proper monetary flow.

However, these incomes remain in dinars. Additionally, in some Serbian communities – mainly in northern municipalities – the dinar continues to circulate as a payment method in local businesses.

Official Belgrade refuses to shut down its institutions in Kosovo, with some relocated to border towns in Serbia. ATMs in these areas allow Kosovo residents to withdraw their incomes in dinars.

"For Dinars, Go to Serbia"

Radomir from Leposavic explained that he now "as usual" withdraws his income in dinars in Raska, a border town in Serbia about 30 kilometers from the majority-Serb municipality in northern Kosovo.

"We usually go there (to Raska) and buy Serbian products that were banned here (in Kosovo) for some time. We're used to paying by card... overall, it's not very convenient, but we’re adapting," he said.

He noted that long queues form at border crossings during payment periods for incomes from Serbia's budget, often requiring several hours of waiting to cross from Kosovo to Serbia or vice versa.

"You have to be patient because there are major delays when pensions or other payments are issued. I have two pensioners (parents) in my family; I used to take them to Raska, but now I have authorization and withdraw their pensions myself," Radomir said.

"Without Integrating Serbs in Kosovo, There Can Be No Normalization with Serbia"

Milorad from Gracanica used to receive his pension in dinars via check, delivered either at a post office operating under the Serbian system or to his home by a postman.

He explained that in the initial months after the dinar ban, he traveled to Serbia every month to collect his pension but eventually opened an account with the Serbian Postal Savings Bank, where the money is now transferred.

Now, he gives his bank card to his children, who withdraw his pension in Serbia.

Every year, Serbia allocates millions of euros to pay incomes for Serbs in Kosovo. In addition to salaries and pensions, financial assistance includes social benefits, child allowances, and similar aid.

In late October 2024, the Serbian government declared the territory of Kosovo a "special social protection zone," enabling additional financial support for the unemployed, pensioners, and children.