Repatriation of the Deutsche Mark and introduction of the Euro in circulation
In 1999, the Deutsche Mark (DEM) became the currency permitted to be used in Kosovo. The Regulation 1999/04 and subsequent Administrative Instruction 1999/02, both issued in 1999, adopted DEM as a means of payment for official accounts and payments.
One of the most important events in the history of CBK was the conversion into Euro. This conversion was formalized through the Directive issued by UNMIK, namely Directive No. 2001/24. The conversion from DEM to Euro was done safely, easily and at reasonable cost. In this process, CBK received strong support also from the IMF, ECB, OeNB, Bundesbank, Commerzbank and Raiffeisen Zentral Bank. Other institutions such as the CFA, UNMIK Customs, PTK, and commercial banks played a significant role, while KFOR assistance was of particular importance.
It was not possible to have an accurate estimation of the amount of DEM circulating in Kosovo, so it was estimated that the import of 500 million Euros was needed to finalize the conversion into Euro by 28 February 2002. The first contingent with Euro (about 100 million Euros) was brought to Kosovo in December 2001. During the period of December 2001 to January 2002, over 1 billion Deutsche marks were exported, while over 350 million Euros were imported. At the same time, nearly 10 million Deutsche Mark coins were repatriated, while about 7 million Euro coins were imported, which, in terms of logistics, reflected the transportation of 100 tons of coins. All this operation also had a significant cost in terms of transport and security, while CBK was the only institutional channel through which the Euro was imported and the Deutsche Mark was repatriated.
On 1 January 2002, all customer accounts held in the CBK and commercial banks were converted from DEM currency to the EUR currency at an irreversible exchange rate of DEM 1.95583 for EUR one. During January and February 2002, both currencies (EUR and DEM) were in circulation, while the conversion of the amounts was made under the pre-determined conditions.
The maximum amount of cash that could have been converted by natural and legal persons in CBK was DEM 10,000. During January – February 2002, about 208,080 persons have converted in CBK about DEM 210.830.000, respectively €107.796.000. Amounts higher than DEM 1000 were converted only by depositing into accounts of commercial bank. This resulted in many accounts opening in commercial banks respectively increase of deposits from 235 million in November 2001 to 480 million in December 2001, or an increase of 104.10%. The conversion into Euro had a great impact on increasing the confidence of the population in Kosovo’s banking system.
The public information campaign was extremely well organized and was carried out in coordination with the CBK team, the assistance of the European Agency for Reconstruction and Development, the Kosovo Chamber of Commerce and the Euro Info Centre. Over 300,000 copies of brochures were printed and distributed in 3 languages – Albanian, Serbian and English. One-day information seminars were held in all CBK branches throughout Kosovo.
After switching into Euro currency, CBK focuses on providing Kosovo with a regular and adequate supply of euro banknotes and coins. In order to protect the integrity of the euro currency, CBK increased the quality of cash and treasury operations by completely revising the rules and procedures of work as well as investing in increasing the physical security of the building in accordance with European standards. In addition to investing in the most advanced money processing equipment, CBK (2005), in accordance with similar provisions in the Eurozone, issued three guidelines and a recommendation that together aim to maintain the integrity of the Euro. In cooperation with the Kosovo Police, special commitments were made in the field of education and the fight against counterfeit money, and lately this commitment was formalized through the establishment of the national committee for combating counterfeit money.