Kosovo and the euro
Encyclopedia
Kosovo
unilaterally adopted the Euro
as its currency in 2002; however, it is not an official Eurozone
member.
. As a result, the UN Interim Administration Mission for Kosovo (UNMIK) was established in June 1999, and is still in operation today.
Kosovo unilaterally declared independence on 17 February 2008. out of United Nations
member states have formally recognised
the Republic of Kosovo
as an independent state. Notably, 22 out of 27 member states of the European Union
and 24 out of 28 member states of NATO have recognised Kosovo. Serbia
refuses to recognise it.
) was bound to Yugoslav monetary policy, and the Yugoslav Dinar
. However, war-time inflation and tensions with the Federal Republic of Yugoslavia had severely discredited the Yugoslav Dinar in Kosovo. As a result people preferred to use and hoard foreign currencies instead of relying on the Dinar. The most frequently used foreign currency was the German Mark
, although the US Dollar and Swiss Franc
were also widely used.
The Bundesbank was not informed in advance, and did not send any additional coins and notes to Kosovo for the changeover. But since there were no restrictions on the import and export of German marks, and many Kosovars working abroad had sent money home, it was possible to supply Kosovo with sufficient marks.
The Yugoslav (and later Serbian) Dinar continued to be widely used in Northern Kosovo and Serb enclaves throughout Kosovo.
on 1 January 2002. The German Mark remained legal tender in Kosovo until 9 March 2002.
The change to the euro was achieved in cooperation with the European Central Bank
, and several national banks in the Eurozone
. By December 2001, about 100 million euro in cash was frontloaded to the Banking and Payments Authority of Kosovo. Kosovo does not mint any coins of its own.
Kosovo
Kosovo is a region in southeastern Europe. Part of the Ottoman Empire for more than five centuries, later the Autonomous Province of Kosovo and Metohija within Serbia...
unilaterally adopted the Euro
Euro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...
as its currency in 2002; however, it is not an official Eurozone
Eurozone
The eurozone , officially called the euro area, is an economic and monetary union of seventeen European Union member states that have adopted the euro as their common currency and sole legal tender...
member.
Background
During the disintegration of Yugoslavia in the 1990’s Kosovo unsuccessfully attempted to gain independence, and in 1998-1999 the situation escalated with the Kosovo WarKosovo War
The term Kosovo War or Kosovo conflict was two sequential, and at times parallel, armed conflicts in Kosovo province, then part of FR Yugoslav Republic of Serbia; from early 1998 to 1999, there was an armed conflict initiated by the ethnic Albanian "Kosovo Liberation Army" , who sought independence...
. As a result, the UN Interim Administration Mission for Kosovo (UNMIK) was established in June 1999, and is still in operation today.
Kosovo unilaterally declared independence on 17 February 2008. out of United Nations
United Nations
The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...
member states have formally recognised
Diplomatic recognition
Diplomatic recognition in international law is a unilateral political act with domestic and international legal consequences, whereby a state acknowledges an act or status of another state or government in control of a state...
the Republic of Kosovo
Republic of Kosovo
Kosovo , officially the Republic of Kosovo is a partially recognised state and a disputed territory in the Balkans...
as an independent state. Notably, 22 out of 27 member states of the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
and 24 out of 28 member states of NATO have recognised Kosovo. Serbia
Serbia
Serbia , officially the Republic of Serbia , is a landlocked country located at the crossroads of Central and Southeast Europe, covering the southern part of the Carpathian basin and the central part of the Balkans...
refuses to recognise it.
Monetary situation prior to 1999
Before the establishment of UNMIK, Kosovo (as part of SerbiaSerbia
Serbia , officially the Republic of Serbia , is a landlocked country located at the crossroads of Central and Southeast Europe, covering the southern part of the Carpathian basin and the central part of the Balkans...
) was bound to Yugoslav monetary policy, and the Yugoslav Dinar
Yugoslav dinar
The dinar was the currency of the three Yugoslav states: the Kingdom of Yugoslavia , the Socialist Federal Republic of Yugoslavia and the Federal Republic of Yugoslavia between 1918 and 2003. The dinar was subdivided into 100 para...
. However, war-time inflation and tensions with the Federal Republic of Yugoslavia had severely discredited the Yugoslav Dinar in Kosovo. As a result people preferred to use and hoard foreign currencies instead of relying on the Dinar. The most frequently used foreign currency was the German Mark
German mark
The Deutsche Mark |mark]], abbreviated "DM") was the official currency of West Germany and Germany until the adoption of the euro in 2002. It is commonly called the "Deutschmark" in English but not in German. Germans often say "Mark" or "D-Mark"...
, although the US Dollar and Swiss Franc
Swiss franc
The franc is the currency and legal tender of Switzerland and Liechtenstein; it is also legal tender in the Italian exclave Campione d'Italia. Although not formally legal tender in the German exclave Büsingen , it is in wide daily use there...
were also widely used.
Introduction of the mark
In the immediate post-conflict period, UNMIK considered it crucial to suspend ties between Kosovo and Yugoslavia. One of these ties was the Yugoslav Dinar. Thus, effective 3 September 1999 UNMIK designated the German Mark as Kosovo’s ‘main currency’. It became the only currency to formulate accounts and to perform compulsory payments. The Yugoslav Dinar was never officially withdrawn from circulation. However its use was “not encouraged”. The use of other currencies, mainly the U.S. Dollar, also continued.The move to establish the mark as legal tender was mostly a legalisation of the already existing situation. In practice the German Mark was already the most widely used foreign currency in the Balkans (Tagesspiegel,1999).The Bundesbank was not informed in advance, and did not send any additional coins and notes to Kosovo for the changeover. But since there were no restrictions on the import and export of German marks, and many Kosovars working abroad had sent money home, it was possible to supply Kosovo with sufficient marks.
The Yugoslav (and later Serbian) Dinar continued to be widely used in Northern Kosovo and Serb enclaves throughout Kosovo.
Towards the euro
Like Germany, Kosovo switched to the euroEuro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...
on 1 January 2002. The German Mark remained legal tender in Kosovo until 9 March 2002.
The change to the euro was achieved in cooperation with the European Central Bank
European Central Bank
The European Central Bank is the institution of the European Union that administers the monetary policy of the 17 EU Eurozone member states. It is thus one of the world's most important central banks. The bank was established by the Treaty of Amsterdam in 1998, and is headquartered in Frankfurt,...
, and several national banks in the Eurozone
Eurozone
The eurozone , officially called the euro area, is an economic and monetary union of seventeen European Union member states that have adopted the euro as their common currency and sole legal tender...
. By December 2001, about 100 million euro in cash was frontloaded to the Banking and Payments Authority of Kosovo. Kosovo does not mint any coins of its own.