Eurasian Economic Union Unready for a Single Currency
23.03.2015
12:30
Russian President Putin’s statement on a single currency in the Eurasian Economic Union (EEU) came out of the blue. While the member states - with a lot of issues to have to deal with - have not yet coped with the challenges of economic integration, the process is fast-tracked, said Bagrat Asatryan, former head of the Central Bank of Armenia (1994-98) at the Media Center hosted discussion.

Asatryan believes the statement was made solely in political context, without well-grounded economic reasons, and efforts should be made to overcome the crisis within the union instead of discussing the possible single currency. “Though being for Armenia’s European integration, I understand any economic union is to lead to the introduction of a single currency. Politicians, however, seem to have come with a hurried decision, yet, it must be more than well-thought out.”

The states that make up the Eurasian Economic Union should adopt a single currency, Russian president Vladimir Putin said during a press conference in the Kazakh capital of Astana on March 20. The Russian president was in town holding talks with Belarussian President Alexander Lukashenko and Kazakh President Nursultan Nazarbayev. Putin instructed Russia's central bank earlier this month to determine the future direction of integration in the monetary and financial sectors in the framework of the Eurasian Economic Union with the study of the feasibility of establishing in the future monetary union. The deadline on the Kremlin instruction is September 1.

The Media Center initiated a discussion on the introduction of a single currency in the Eurasian Economic Union. The speakers included: Bagrat Asatryan, Ex-Head of the RA Central Bank (1994-1998); Tatul Manaseryan, economist, head of the Alternative Analytical Center; and experts from Moscow Mikhail Delyagin, Director of the Institute of the Globalization Issues, and Alexander Knobel, economist, who joined the discussion via video call.

The experts believe the concept for creating a single currency is still in its early days, the bloc has tentatively agreed to bring in a single currency and a Eurasian Central Bank by 2025. “As long as the union does not have a unified fiscal policy, it is too early to discuss a single currency,” Asatryan said.

The different levels of economic development among EEU member states may hinder the creation of a single currency, Alexander Knobel said. “Besides, our countries have adopted quite another philosophy. And there is a gap regarding the GDP per capita, etc.” Knobel said. The proposal to create a single currency has set off a public excitement since it proves to be political. “The more these processes accelerate, the more investments one of the member states should make. Supposingly, that country is Russia.”

The introduction of the EEU single currency is an economic process which comprises Russia, Belarus, Kazakhstan while Armenia is not included in the process since it has just joined the union and Kyrgyzstan is only set to join the bloc. “It is crucial to measure the degree of monetization of separate economies, otherwise, problems can arise for which more powerful states will have to pay,” Knobel said.

Tatul Manaseryan agreed, saying “Economic unions adopt a single-currency policy provided that there are appropriate economic grounds and not merely political will. To establish a monetary union blocs must go through several stages of integration and development. As for now, it is early to speak about a single currency but it is essential to hold discussions.”

Arshaluys Mghdesyan, Editor-Coordinator

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