On 1 January people in Kosovo -- along with 250 million people in the European Union's 12-nation euro-zone -- will begin using euro notes and coins in their daily transactions. RFE/RL correspondent Mark Baker spoke recently with the head of Kosovo's monetary authority, Mohamed Bouaouaja, about how the transformation will take place and whether any special rules apply.
Prague, 20 June 2001 (RFE/RL) -- Mohamed Bouaouaja is the managing director of the international community's Banking and Payment Authority of Kosovo, known locally as the BPK.
The Pristina-based BPK functions as Kosovo's de facto central bank, performing all of the normal activities of a central bank -- with the notable exception of issuing money. In Kosovo, the German mark is legal tender. And in January, when the 12 nations of the European Union begin phasing out their national currencies -- including the mark -- and begin using the euro, Kosovo will switch currencies along with them.
As managing director, Bouaouaja is overseeing the BPK's euro effort. He took some time today to speak to our correspondent about how he sees the switchover and whether he anticipates any problems.
Bouaouaja says that no one knows for sure how many German marks Kosovo's nearly two million people are holding outside of the banking system -- and therefore no one can say what the demand for euros is likely to be.
"No we don't [have any idea how many marks there are]. There's no methodology for that. All tentative [estimates] made in other countries failed. And there's no recognition of any figure about currencies which are not issued by the central bank of the country itself. As the Deutschemark is not issued by the BPK, it's difficult -- maybe impossible -- to determine the amount of cash in circulation."
Estimates for Bosnia-Herzegovina and Macedonia have put the number of marks that are privately held in those countries at nearly a billion each.
Bouaouaja says that to ensure enough euros are available to meet demand, the number of marks a person can exchange without paying a fee will be limited. He says people will be able to bring up to 1,000 marks to the banks and exchange them without incurring commissions or fees.
"[After the first 1,000 marks], up to 10,000 [marks] will be exchanged into euros, but a fee will be charged. Beyond that amount, there will be no exchange into cash. [Only deposits into bank accounts will be accepted.]"
Bouaouaja says that as with many countries in the euro-zone, citizens will be able to use either euros or German marks until February 28, when all marks will be withdrawn from circulation. Unlike the euro-zone, however, the BPK will not guarantee the exchange of marks for euros after February. In most euro-zone countries, central banks will continue to accept national currencies for several years to come.
Bouaouaja says that to avoid any confusion or problems at the start of next year, Kosovars should open German mark bank accounts now. Banks accounts will be automatically converted to euros on January 1.
"In view of the change-over to the euro, it would be easier for [people wanting to exchange German marks] to open accounts now. To deposit their cash. In January and February, they will not need to go to the tellers in order to exchange their D-marks [German marks]. If they need euros they would just withdraw euros from their accounts, because all accounts on January 1, 2002, will be converted into euros."
Bouaouaja tells our correspondent that awareness among the general public that the mark will be phased out is fairly high in Kosovo. The BPK is planning to launch information campaigns later this year and the beginning of next year to instruct people what to do.
"We started informing the public, and there will be a more extensive information campaign, which will be intensified starting next September. During the last four months of the year, and beginning [in] 2002, there will be a very intensive information campaign."
But he admits confidence in the banking system remains low -- a strong impediment to convincing people to trust banks with their life savings. He says one of the BPK's main tasks is to restore confidence.
"It is a problem in Kosovo. People lost confidence in banks. But we are explaining to them that the new banks are different from the old ones. The new banks have been licensed by the BPK after a very comprehensive processing of their applications and investigations on the shareholders, the managers, the directors. Banks are also supervised by the BPK, so there is no reason why the population shouldn't deposit their cash in the banks."
Another impediment to getting people to surrender marks in some areas are requirements that citizens disclose the origin of the money when they exchange their marks or open bank accounts.
Bouaouaja says that, generally, people will not have to say where the money came from when they bring their marks in to convert them.
"No, [you won't have to declare the source of the cash. But when you open an account] you will have to disclose your identity. And of course if you make a deposit when you open an account, the bank needs to document this operation."
Bouaouaja says authorities will honor international rules to restrict money laundering. He says all transactions above 30,000 German marks will be reported to the BPK.
Prague, 20 June 2001 (RFE/RL) -- Mohamed Bouaouaja is the managing director of the international community's Banking and Payment Authority of Kosovo, known locally as the BPK.
The Pristina-based BPK functions as Kosovo's de facto central bank, performing all of the normal activities of a central bank -- with the notable exception of issuing money. In Kosovo, the German mark is legal tender. And in January, when the 12 nations of the European Union begin phasing out their national currencies -- including the mark -- and begin using the euro, Kosovo will switch currencies along with them.
As managing director, Bouaouaja is overseeing the BPK's euro effort. He took some time today to speak to our correspondent about how he sees the switchover and whether he anticipates any problems.
Bouaouaja says that no one knows for sure how many German marks Kosovo's nearly two million people are holding outside of the banking system -- and therefore no one can say what the demand for euros is likely to be.
"No we don't [have any idea how many marks there are]. There's no methodology for that. All tentative [estimates] made in other countries failed. And there's no recognition of any figure about currencies which are not issued by the central bank of the country itself. As the Deutschemark is not issued by the BPK, it's difficult -- maybe impossible -- to determine the amount of cash in circulation."
Estimates for Bosnia-Herzegovina and Macedonia have put the number of marks that are privately held in those countries at nearly a billion each.
Bouaouaja says that to ensure enough euros are available to meet demand, the number of marks a person can exchange without paying a fee will be limited. He says people will be able to bring up to 1,000 marks to the banks and exchange them without incurring commissions or fees.
"[After the first 1,000 marks], up to 10,000 [marks] will be exchanged into euros, but a fee will be charged. Beyond that amount, there will be no exchange into cash. [Only deposits into bank accounts will be accepted.]"
Bouaouaja says that as with many countries in the euro-zone, citizens will be able to use either euros or German marks until February 28, when all marks will be withdrawn from circulation. Unlike the euro-zone, however, the BPK will not guarantee the exchange of marks for euros after February. In most euro-zone countries, central banks will continue to accept national currencies for several years to come.
Bouaouaja says that to avoid any confusion or problems at the start of next year, Kosovars should open German mark bank accounts now. Banks accounts will be automatically converted to euros on January 1.
"In view of the change-over to the euro, it would be easier for [people wanting to exchange German marks] to open accounts now. To deposit their cash. In January and February, they will not need to go to the tellers in order to exchange their D-marks [German marks]. If they need euros they would just withdraw euros from their accounts, because all accounts on January 1, 2002, will be converted into euros."
Bouaouaja tells our correspondent that awareness among the general public that the mark will be phased out is fairly high in Kosovo. The BPK is planning to launch information campaigns later this year and the beginning of next year to instruct people what to do.
"We started informing the public, and there will be a more extensive information campaign, which will be intensified starting next September. During the last four months of the year, and beginning [in] 2002, there will be a very intensive information campaign."
But he admits confidence in the banking system remains low -- a strong impediment to convincing people to trust banks with their life savings. He says one of the BPK's main tasks is to restore confidence.
"It is a problem in Kosovo. People lost confidence in banks. But we are explaining to them that the new banks are different from the old ones. The new banks have been licensed by the BPK after a very comprehensive processing of their applications and investigations on the shareholders, the managers, the directors. Banks are also supervised by the BPK, so there is no reason why the population shouldn't deposit their cash in the banks."
Another impediment to getting people to surrender marks in some areas are requirements that citizens disclose the origin of the money when they exchange their marks or open bank accounts.
Bouaouaja says that, generally, people will not have to say where the money came from when they bring their marks in to convert them.
"No, [you won't have to declare the source of the cash. But when you open an account] you will have to disclose your identity. And of course if you make a deposit when you open an account, the bank needs to document this operation."
Bouaouaja says authorities will honor international rules to restrict money laundering. He says all transactions above 30,000 German marks will be reported to the BPK.
