EEU to introduce a single unit of account

Almaty. July 26. Silkroadnews – The Eurasian Development Bank (EDB) proposed to the EEU member states’ central banks to introduce a regional settlement monetary unit following the example of the ECU operating in Europe in 1979-1998 prior to introduction of the euro, KazTAG reports with reference to the Russian newspaper “Izvestia”.
Evgeny Vinokurov, Director of the Center for Integration Studies at the EDB, told “Izvestia” about the initiative.
“There is a number of tools we offer the monetary regulators for discussion, for the long term mainly. For example, a regional unit of account, serving not as a single currency, but as an instrument to facilitate mutual settlements”, he explained.
According to him, technically it looks like calculation of a single monetary unit based on the basket of currencies with certain weights available in the region. The expert reminded, recently Kazakhstan proposed the idea of creating a regional accounting unit based on crypto currency technologies. He also noted, there are a lot of issues related to its functioning from the financial market point of view at this stage, including emission and control of money turnover.
“We start thinking about this, so far there are many issues arising in this regard”, he added.
The expert suggested that this could be the “Silk Way Settlement Unit”, noting that the regional monetary unit is needed primarily to serve the trade flows. Yet, Kazakhstan suggested to go further and use the blockchain when creating a settlement currency.
As the newspaper notes, the world has accumulated extensive experience in using settlement monetary units both in various regional integration associations and on a more global scale. The most known of them are SDRs (special drawing rights of the International Monetary Fund), the European ECU, the transferable ruble (the collective settlement currency of the Council for Mutual Economic Assistance). At the same time, the calculated monetary unit cannot be called a full currency, as it is used for settlements between countries only.
Now, the calculations of the EEU states with Russia are conducted in rubles, while in US dollar between the other countries. The introduction of the unit of account could fix this, EDB believes.
Meanwhile, the Eurasian Economic Commission (EEC) told “Izvestia”, the issue had not yet been discussed with the EEU states, but noted that the introduction of a single currency could help more efficient management of currency risks. At the same time, the Director of the Financial Policy Department of the EEC, Tigran Davtyan, noted the point in case is not about copying financial technologies of other countries.
“In the future, the introduction of the Eurasian unit of account could help raising share of national currencies in mutual trade between the member states, as well as contribute to more efficient management of currency risks and lower transaction costs in mutual settlements”, he pointed out speaking on possible positive consequences of a single monetary unit introduction.
In general, the EEU member states central banks are ready to consider this initiative, a source close to the EEC told “Izvestia”. However, according to him, the Russian Central Bank believes that the role of the regional monetary unit “should be performed by the ruble, and there is no need to invent a new one”. According to the regulator, the ruble’s share in the international settlements is 1%, though reaches 60-80% within the EEU. At the same time, the Bank of Russia recognizes that the national currency dominates only in bilateral transactions with participation of Russia. In transactions between other states, the US dollar still prevails meaning “as a regional currency rubble does not perform the function of a universal measure of value and payment”.
The experts believe, the preconditions for transforming the ruble into a full-fledged regional currency are not yet available and that the development of a regional monetary unit is reasonable in case the member states are moving toward the monetary union creation. Dmitry Kulikov, expert of the research and forecasting group of ACRA, notes that the currency can be relatively risk-free in operations between central banks and governments, and is, first of all, about the debt relations. With this, Russia and Kazakhstan, having historically a fairly stable exchange rate between the national currencies, have more incentives and opportunities for mutual monetary integration compared to other EEU countries.