MONETARY STRATEGY IMPLEMENTED IN KOSOVO

Speech by Michel SVETCHINE, Managing Director, Central Banking Authority of Kosovo - at the VII Annual Conference of the Bank of Albania “Monetary Policy Strategies for Small Economies”, Hotel “Tirana International”, 6 December 2007

Introduction

Among the numerous challenges that Kosovo had to face just after the 1999 conflict was to choose a monetary
framework. For various reasons, and, above all, due to the massive loss of confidence in the Yugoslav Dinar and the correlative use of German Deutsche Mark as a medium of transactions and savings, the United Nations Interim Mission in Kosovo (UNMIK) decided to legitimize the use of the deutsche mark (DEM) as well as, in parallel, the use of other currencies1. Since the DEM was the only mean of payment allowed to perform mandatory payments and to keep accounts, the German currency was adopted unilaterally as the de facto currency of Kosovo. Then, after the euro change in early 2001, the euro became, in turn, the legal tender of Kosovo2. Presently, Kosovo’s economy is a fully euroised one, with a limited use of Serbian Dinars in Kosovo Serb populated areas, while other currencies, even the US dollar, are very marginally used, even by foreigners. (full speech)