Is a common currency realistic in the EaEU space?And is there demand for it?By Vestnik KavkazaTatyana Valovaya, Integration and Macroeconomics Minister of the Eurasian Economic Union, speaks about the possibility of launching a common currency system within the Eurasian Economic Union.She thinks that “monetary union is possible within the limits of an economic union, but at the moment we aren’t discussing the prospects of a monetary union and a common currency. There are two reasons for this. The first reason is that to discuss monetary union, we should have demand for a common currency. I'll give you a simple example. The Europeans began discussing a common currency when they completed establishing the Customs Union. They decided to launch a common currency in 1968-1969, and planned to launch it in 1980. But they didn’t. At the time there was no demand for a common currency, as there was no common internal market. Only after building the common internal market, there was demand for a common currency, as losses from not launching the common currency surpassed the risks connected with it. This is the first aspect; and a certain level of economic integration is needed. Our Economic Union needs time to gain the demand for a common currency.” According to Valovaya, “we have studied the experience of the EU in detail. They had heavy discussions about the next steps as well – to develop an economic union or a monetary union. They decided to develop them in parallel. At the moment we can see that they didn’t solve certain problems that needed to be solved, when they decided to launch a common currency. Only when the monetary crisis developed, which was connected with the euro, did they decide to realize it. It was very positive that they didn’t step backward, but they started to make new decisions which supplemented the existing basis which was the backbone of the monetary union. All decisions on a banking union and financial measures should be made before launching a common currency. They should not be a reaction to a crisis of the currency. Considering the experience, we discuss further development of economic integration. It is clear for us that we don’t need a common currency at the moment. Valovaya says that the Integration and Macroeconomics Minister of the Eurasian Economic Union is focused on discussion of different directions: “We realize that in the context of the economic space, when we are disarmed, we have no methods of trade security, customs and rate security. We regularly eliminate non-rate obstacles; risks which are connected with currency non-coordination and non-coordination of macroeconomic policies are growing. To reduce the risks, in our new agreement we improve all provisions on providing a coordinated macroeconomic policy, on cooperation between our departments and central banks in the sphere of monetary policy.”According to the minister, “considering experience of the EU, we have realized that first of all we should harmonize the financial sector, and only after that think about monetary projects. That’s why we have described establishing the common market of financial services in detail in the new agreement. The market has to be formed no later than 2025; we have already decided on establishing a supranational regulator which will be situated in Alma-Ata, which is going to be the financial capital of our union. It doesn’t mean that national regulators will be eliminated. They will remain, but as the market will be common, and a company, a bank or an insurance organization which has a license for working in one country will have an opportunity to work in other countries of the union without additional procedures, this is necessary to harmonize national regulations so that they would be provided, according to common rules. Of course, to define the rules, to monitor the situation, we need a supranational regulator.” Valovaya emphasized that “we cannot rule out that a common currency will be discussed in the future; but today we correlate our economic necessities with reality. We intend to establish an economic union with necessary elements and coordination in the monetary and macroeconomic sphe
By Vestnik Kavkaza
Tatyana Valovaya, Integration and Macroeconomics Minister of the Eurasian Economic Union, speaks about the possibility of launching a common currency system within the Eurasian Economic Union.
She thinks that “monetary union is possible within the limits of an economic union, but at the moment we aren’t discussing the prospects of a monetary union and a common currency. There are two reasons for this. The first reason is that to discuss monetary union, we should have demand for a common currency. I'll give you a simple example. The Europeans began discussing a common currency when they completed establishing the Customs Union. They decided to launch a common currency in 1968-1969, and planned to launch it in 1980. But they didn’t. At the time there was no demand for a common currency, as there was no common internal market. Only after building the common internal market, there was demand for a common currency, as losses from not launching the common currency surpassed the risks connected with it. This is the first aspect; and a certain level of economic integration is needed. Our Economic Union needs time to gain the demand for a common currency.”
According to Valovaya, “we have studied the experience of the EU in detail. They had heavy discussions about the next steps as well – to develop an economic union or a monetary union. They decided to develop them in parallel. At the moment we can see that they didn’t solve certain problems that needed to be solved, when they decided to launch a common currency. Only when the monetary crisis developed, which was connected with the euro, did they decide to realize it. It was very positive that they didn’t step backward, but they started to make new decisions which supplemented the existing basis which was the backbone of the monetary union. All decisions on a banking union and financial measures should be made before launching a common currency. They should not be a reaction to a crisis of the currency. Considering the experience, we discuss further development of economic integration. It is clear for us that we don’t need a common currency at the moment.
Valovaya says that the Integration and Macroeconomics Minister of the Eurasian Economic Union is focused on discussion of different directions: “We realize that in the context of the economic space, when we are disarmed, we have no methods of trade security, customs and rate security. We regularly eliminate non-rate obstacles; risks which are connected with currency non-coordination and non-coordination of macroeconomic policies are growing. To reduce the risks, in our new agreement we improve all provisions on providing a coordinated macroeconomic policy, on cooperation between our departments and central banks in the sphere of monetary policy.”
According to the minister, “considering experience of the EU, we have realized that first of all we should harmonize the financial sector, and only after that think about monetary projects. That’s why we have described establishing the common market of financial services in detail in the new agreement. The market has to be formed no later than 2025; we have already decided on establishing a supranational regulator which will be situated in Alma-Ata, which is going to be the financial capital of our union. It doesn’t mean that national regulators will be eliminated. They will remain, but as the market will be common, and a company, a bank or an insurance organization which has a license for working in one country will have an opportunity to work in other countries of the union without additional procedures, this is necessary to harmonize national regulations so that they would be provided, according to common rules. Of course, to define the rules, to monitor the situation, we need a supranational regulator.”
Valovaya emphasized that “we cannot rule out that a common currency will be discussed in the future; but today we correlate our economic necessities with reality. We intend to establish an economic union with necessary elements and coordination in the monetary and macroeconomic spheres.”
