Russian official says dollar, euro could be banned in Eurasian Union; Kazakh National Chamber of Entrepreneurs responds

Russian Izvestia newspaper has published an article under the name “Erasian Economic Union intends to abandon dollar and euro” ("Евразийский экономический союз намерен отказаться от доллара и евро").

The chairman of the board of directors of Russia’s National Payment Council Alexander Murychev told the newspaper on December 2 that dollars and euros could be banned within the Union of Armenia, Belarus, Kazakhstan and Russia, who would instead switch to national currencies: dram, Belarusian ruble, tenge and Russian ruble. This will happen by 2025-2030, he said.

This proposal was included into the draft concept of payment systems development in the EEU.

Murychev said that the new concept envisaged creation of a joint payment space that would provide for transactions in local currencies and compatibility of national card systems (such as  BelCard of Belarus, Armenian Card of Armenia and a system being development in Russia).

He added that the next step would be to create a single currency of the Union. Murychev compared this situation to the EU that had been built for decades and eventually led to creation of the euro 15 years ago.

"Creation of a single payment space in the EEA will create prerequisites for introduction of multi-currency transactions or fast transition to a single currency space. At the same time the national banks of the member-states should consider excluding the US dollar and the euro from the list of currencies used for interstate payments," Murychev said.

Chairman of the committee on financial market of the State Duma Natalya Burykina called this initiative logical in light of the plans to create a single economic space within the EEU.

Member of the Committee on Economic Policy of the Federation Council of Russia Yevgeny Tarlo also supported the idea, maintaining that the emission of the dollar was very high, the collapse of the US economy could not be ruled out and the US foreign debt was enormous.

Such statements caused quite a buzz in the public. People were waiting for an official reaction. It came later the same day from the National Chamber of Entrepreneurs of Kazakhstan.

"The National Chamber informs that the Treaty on the Eurasian Economic Union does not precludes use of foreign currencies in mutual settlements between residents of the EEU member-states. According to the Eurasian Economic Commission, the work to create any such document is not currently underway. The coordinated monetary policy within the EEU is only called to increase the role of national currencies in trade and investment operations and facilitate implementation of economic policies aimed at ensuring confidence in the national currencies," they said.

They added that the choice of currency was a right of businessmen and in many cases they reserved to foreign currencies as basic tools for hedging their currency risks.

"The National Chamber is convinced that enhancing the role of national currencies in interstate trade of the EEU member-states should be based on creation of a package of incentives for the market players, rather than on prohibitions and restrictions," they stressed.

The chamber also emphasised that the statement on abandoning the dollar and the euro was a personal opinion of Alexander Murychev, and urged entrepreneurs to focus on the information provided by official sources.

Today, the Eurasian Economic Commission also voiced its view of the situation. They said that the member states were reviewing proposals for the Treaty of the EEU. The fact that the National Payment Council was putting its proposal on the table does not mean it will be adopted, they said.

They added that statements on banning interstate operations in dollars and euro in the EEU had no basis in reality. There is no such regulation in the Treaty of the EEU. What the Treaty includes are “the goals and principles of coordinated fiscal policy developed by member-states in order to deepen the economic integration, develop cooperation in the monetary and financial sphere and ensure freedom of movement of goods, services and capital, increase the role of national currencies of member-states in foreign trade and investment operations, as well as provide mutual convertibility of these currencies,” the Commission said.

They noted that the Treaty incudes measures aimed at implementing coordinated monetary policy, which implies, in particular, the possibility of making settlements between residents of the member-states in national currencies.

Furthermore, they said that coordinated integration of the countries' payment systems was focused on making them cheaper and safer, and all this did not mean abandoning the dollar and the euro and creating a single currency for the EEU.

The Eurasian Economic Union will come into force starting 1 January 2015. By the end of this year Kyrgyzstan plans on joining the Union and becoming its fifth member.

By Dinara Urazova (Azhar Ashirova contributed to the story)