Will Ukraine be proposed a Euro-Asian alternative to its national currency?

In the near future, the Russian ruble could be used as a unified payment means in the Euro-Asian Economic Commonwealth. So remarked Russian Prime Minister Mikhail Kasyanov in his February 19th speech at the EurAsEC economic forum, informs the RIA Novosti information agency. “Today the integration level is so high that it is time to think about a common currency,” the head of the Russian government said. Primarily, in Mr. Kasyanov’s opinion, it is necessary to speed up the process of creating a common payment system in the EurAsEC territory, based on the national currencies, and to define a permissible fluctuation level among their rates. To implement a single currency in the EurAsEC states, it is necessary to first move forward with real integration, i.e. creating a free trade zone, Customs Union, and a single economy space, Kasyanov said. To achieve these goals, in his view, the EurAsEC member states should be prepared to use “serious and even cardinal” measures of both administrative and legislative character. “We’ll have to sometimes give up a momentary profit for the future,” the premier stated. President of Kazakhstan Nursultan Nazarbayev, in his turn, suggested implementing a single currency in the EurAsEC by 2011.

The Euro-Asian Economic Commonwealth includes Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan. Ukraine and Moldova maintain an observer status in the organization. Recall that high-ranking Russian officials repeatedly propose that Ukraine enter the EurAsEC.

COMMENTARY

Ihor BURAKOVSKY, Director of the Institute for Economic Research:

“Implementing a single currency in one or another integration formation should result from a certain level of development of this formation. The experience of, say, the European Union demonstrates that implementing a common currency requires building many institutions, achieving a very high level of integration among the national economies. In my view, today one can speak about implementing the ruble as a single EurAsEC currency only in theory. Russia will hardly agree to create an independent central bank similar to the EU one, which would immediately secure independent money and credit policy inside the whole Commonwealth. Obviously, it will be the Central Bank of Russia that will carry out these functions. Such a situation can be described as Russia’s money and credit system absorbing the ones of the EurAsEC member countries. Thus, this is not as much about integration inside the Commonwealth borders as about the member countries joining the Russian economic space. In principle, such a model is possible, but I believe that, proceeding from national security issues and preserving a certain degree of economic sovereignty, it will hardly satisfy other EurAsEC members.

“Besides, there exists another big problem, that of the stability of the Russian ruble. It’s an open secret that it is not an international currency and isn’t as broadly used as the euro or American dollar. Thus prospects for creating such a currency zone, at least at present, look quite uncertain.”