Kosovo’s central bank has declared the euro the official currency for transactions, in a shift away from the use of Serbian dinars for payments.

Despite the historical context of Kosovo's 1999 war of independence and the subsequent establishment of the Central Bank of Kosovo (CBK), Serbia's payment system continued to function in majority Serbian areas within Kosovo. 

The decision comes into effect on February 1, bringing with it a series of changes aimed at streamlining financial transactions and enhancing the stability of the currency market.

The CBK's new directive clearly stipulates that the euro is the only legal currency for daily transactions in Kosovo. 

Both Kosovo and Montenegro already use the euro as their de facto domestic currency, despite not having an agreement with the European Union. 

As Kossev reported, other currencies, including the dinar, are relegated to the status of "valuables for storage in physical form" or as bank deposits exclusively denominated in currencies other than the euro. 

However, the regulation allows for the use of other currencies in international payments or foreign exchange activities, offering some flexibility in cross-border transactions.

Another notable aspect of the new regulations is the withdrawal of €500 banknotes from circulation, effective from February 1. This move is designed to combat the potential threat of counterfeiting and safeguard the integrity of the currency. 

European Union envoy Miroslav Lajcak indirectly confirmed the de facto suspension of payment transactions with Serbia. 

Serbian Prime Minister Ana Brnabic has expressed her concerns regarding the ban on the use of Serbian dinars in Kosovo. 

If this measure is put into effect, the utilisation of the Serbian dinar within Kosovo is set to be halted, posing significant challenges for citizens, predominantly Serbs, but also affecting Albanians and others, along with adverse repercussions for the local economy, as suggested by sources interviewed by Kosovo Online.

The decision would particularly impact employees in businesses affiliated with Serbia and reliant on Serbian budgetary support, raising uncertainties about the withdrawal of pensions and social benefits from the Serbian budget, with the specific procedures and banking institutions involved remaining unclear in this potential scenario.

The announcement that Serbia’s NLB Komercijalna banka plans to close its branches in Kosovo as of February 1 also worried citizens.

The acting director of Post of Serbia, Zoran Djordjevic, was cited by Kosovo Online as saying that the company is actively exploring ways to maintain its existing operations. He claimed Pristina and Kosovo’s PM Albin Kurti no longer want Serbs in Kosovo.

Djordjevic said that individuals employed in institutions funded by Serbia rely on Post of Serbia for salary disbursements, highlighting the vulnerability of those engaged in Serbian institutions. 

He said that all dinar transactions are exclusively facilitated through Post of Serbia, which caters to a broad spectrum of users, including citizens engaging in financial transactions, payments, salary distributions, pensions, social benefits, voucher applications, as well as sending and receiving packages.