National Bank of Serbia: Without delay, abolish measures preventing the use of the dinar in Kosovo

The National Bank of Serbia has strongly condemned and called for the immediate repeal of measures preventing the transportation and distribution of dinars in Kosovo.

Regarding the latest unilateral measures by Pristina, de facto aimed at preventing the import and use of the Serbian dinar in Kosovo from February 1 for conducting cash payment transactions, the National Bank of Serbia points out that this practically means the impossibility of paying salaries, pensions, social benefits, and other incomes to the Serbian population in dinars.

In the statement, they emphasize that the announced measures are contrary not only to elementary international standards in finance and banking but also to the agreements and the way dinar cash flows have been conducted for years.

These measures are solely aimed at depriving the basic income that the population and economic entities earn in dinars in Kosovo, thereby preventing the essential conditions for the survival, primarily of the Serbian population, the National Bank of Serbia warns.

"The announced measures completely arbitrarily and discriminatorily regulate the field of cash payment transactions and change the way the transport of dinars has functioned for years, practically preventing cash payment transactions in dinars", the statement said.

They add that the main reason for the new measures is cited as the future exclusive use of the euro as the "official currency" for cash payment transactions in Kosovo, which practically means the elimination of the possibility of using the dinar, which has been used without hindrance in Serbian communities.

"We emphasize that the Provisional Institutions of Self-Government in Kosovo and Metohija are by no means authorized to proclaim the euro (or any other foreign currency) as the only permitted currency in Kosovo and Metohija, nor can the euro represent a legal means of payment in Kosovo and Metohija, as the National Bank of Serbia is the only competent issuing institution authorized to decide on the use of the dinar throughout the territory of the Republic of Serbia", the National Bank of Serbia states.

Regarding the official currency and legal means of payment in Kosovo, they note that there is currently no officially established currency in Kosovo and Metohija, nor is it the euro, as confirmed by the EU and the European Central Bank in their publicly available information because the euro cannot be issued or introduced as the currency of countries that are not EU members and do not meet the "Maastricht criteria" for joining the eurozone.

"Moreover, it is clearly stated that the 'legal tender' in Kosovo and Metohija is not the euro but only that the euro has been factually accepted by (a part of) the population - The euro outside Europe (europa.eu). Therefore, the use of the dinar in Kosovo and Metohija cannot be prohibited abruptly and without a basis", the statement said.

Furthermore, providing permission instead of a reporting system for each inflow of funds across the administrative boundary, and that too only to a financial institution with a special permit from Pristina, is contrary to any comparative practice and unknown in any financial system that is even somewhat aligned with international standards, according to the National Bank.

Especially, they say, it is unusual where a country does not issue its own currency and thus does not have instruments of monetary policy.

"It is needless to emphasize that the mentioned regulation of provisional institutions was adopted out of the public eye, without public debate in which neither the Albanian community nor the representatives of the Serbs in Kosovo and Metohija were involved, and all this outside the dialogue process", they add.

Additionally, the proposed solutions of the controversial Regulation stipulate that other non-euro currencies can be used in Kosovo only as "value for storage in physical form or bank accounts in non-euro currencies, for conducting international payments in non-euro currencies and for currency exchanges, and that currency exchange can be done in Kosovo and Metohija only through institutions licensed by the Provisional Institutions of Self-Government in Kosovo and Metohija".

This practically prohibits the use and availability of dinars to the citizens of Kosovo and Metohija who receive pensions, salaries, and social benefits in dinars and prevents the withdrawal of dinars from ATMs, direct payments, or withdrawals at post offices and financial institutions, as well as any transactions between citizens and businesses in dinars.

"The aforementioned solutions, if implemented, will undoubtedly lead to a deterioration in the position of the Serbian population and additional pressures, the inability to pay salaries, pensions, and social assistance, and ultimately result in the inability of the Serbian population to live and work in Kosovo and Metohija. At the same time, there are no real, objectively conditioned needs to change the practice that allows payment to individuals and legal entities that need dinars, and whose sources of income and business are in dinars", the statement says.

Regarding the alleged need to control money flows and prevent money laundering and terrorist financing, the National Bank of Serbia emphasizes that the introduction of dinars to Kosovo is a completely transparent process, subject to control in this way and that it has been carried out smoothly for years. Both the competent authorities of Serbia and Pristina are aware of this since each individual transfer and its quantity of dinars are recorded on administrative lines, and the transport is provided by a licensed company under the supervision of Pristina.

"So, when it comes to the risk of non-transparent introduction and abuse of dinars, this risk does not exist and has been eliminated by previous agreements that are now unilaterally canceled by the measures of Pristina", the statement says.

They also point out that it is not only about a unilateral, illegal monetary measure that violently changes the practice of conducting payment transactions for individuals whose sources of income and business are in dinars but a measure whose implementation directly endangers the existence of the Serbian population and aims to further push the Serbian population out of Kosovo. There is no justified reason why cash payment transactions in dinars should not continue to function in the same way as they have for years.

Therefore, the National Bank of Serbia, in cooperation with relevant institutions of Serbia, is taking all necessary measures within its competence to prevent the implementation of the aforementioned regulation and protect the Serbs in Kosovo.

"The National Bank of Serbia believes that it is necessary to immediately repeal the discriminatory and unprecedented measures introduced by the Temporary Institutions in Pristina to enable the smooth transport and distribution of dinars through financial and other institutions that, through their counters and ATMs, make their payments and prevent the denial of the basic conditions for the life of the Serbian population in Kosovo and Metohija", the statement concludes.