Kosovo’s Central Bank Governor, Ahmet Ismaili, in an interview for “Kallxo Përnime” show, on Sunday, referring to the much disputed Regulation on Cash Operations explained that the Euro-only policy was reiterated to fight money laundering by regulating and licensing money import.

“This Regulation has regulated cash and who has the right to import money. If Serbian institutions wish to transfer funds to Kosovo, they are allowed in a bank account without restrictions,” Ahmeti said, urging Kosovo Serbs to open bank accounts and be part of the Kosovo financial system, noting that many already receive pensions and aid from Kosovo. Ismaili insisted that no one is prohibited from keeping, converting, or accepting funds in dinars as long as everything is done via legal transactions.

Kosovo has been using the euro since 2002, but people in Serb-majority municipalities, especially in the north, use both Serbian dinars and euros. The new currency regulation entered into force on February 1, despite international calls for a postponement.

“The interest here is for citizens to receive every aid that comes from Serbia, as long as it is via transparent and official routes,” Ismaili said.

 Ismaili claimed that only in 2023, over 200 million euros worth of Serbian dinars entered Kosovo from Serbia, via illegal routes and went to financial institutions not licensed by the Central Bank, mainly in Serb majority North of Kosovo.

“The Central Bank was neither informed nor  involved in the process of the entrance of this money. We don’t know how secure this 200-million is; these have entered into institutions not licensed by the Central Bank,” Ismaili said.

“This has been an illegal activity,” he emphasized.

On Friday, February 2, Serbia’s President, Aleksandar Vucic, told the media that Serbia will issue around 22 million Euros worth of Serbian dinars to Kosovo Serbs, in advance, for February’s salaries, pensions, and other social benefits.

“We started paying salaries, pensions and social benefits to our people in Kosovo and Metohija in advance, long before it was time to pay the February benefits. By 12 o’clock, we had already managed to pay around five million,” Vucic said.

The phenomena has gone on for decades, therefore, financial institutions importing money into Kosovo from February 1 onwards will need a license and authorization from the Kosovo Central Bank.

Explaining that prior to being the Central Bank Governor he was the Director of the Treasury, Ismaili claimed that “illegal financing by Serbia has been noted over the years” in Brussels as well. 

The Law on Public Financial Management and Accountability “has allowed unlimited financing from Serbia for Serb municipalities. These funds have entered the border through a transporter declaring amounts exceeding 10,000 euros. The question was raised: Why did this money not come through the bank but through the borders? The discussion then was that this is a (internal) matter for Kosovo,” he continued.

The OSCE, EU, and the US have separately called on Kosovo to refrain from unilateral actions when it comes to decisions that affect the Serbian community, in order not to escalate tensions, requesting time for the implementation of a euro-only policy for the Kosovo Serbs.

Ismaili accepted that the US had requested a postponement of the implementation of the policy, claiming the Central Bank considered that would mean to accept illegality.

The OSCE on Sunday said it was “concerned that this regulation will have a serious impact, especially for those residents receiving payments in dinars”.

The OSCE acknowledged Kosovo’s “readiness to provide a transitional period and invest in better communication in order to avoid difficulties and lack of clarity for those affected”, but reminded Kosovo of its obligation to respect minority rights and have every “public communication in both official languages”, Albanian and Serbian.

On February 1, 2024, Kosovo relevant authorities started to implement the decision not to allow the import of money from unlicensed parties and in accordance to a government pledge for a transitional period, allow an undefined time for Kosovo Serbs to start using Euro in their daily transactions.

On January, 31, Kosovo Deputy PM Besnik Bislimi emphasized that, during an undefined transitional period, no one will be punished for using dinars and money flows from Serbia will not be banned.

However, on February 3, police seized a vehicle transporting Serbian dinars to verify whether the transportation was legal. The Peja/Pec Basic Prosecution told Kallxo that two persons were questioned by police.

Meanwhile, Serbia’s  President, Aleksander Vucic, on Friday, has declared that Belgrade will continue to fund Kosovo Serbs in dinars. He also said Serbia will submit a request for an emergency session of the UN Security Council on Monday.

The European Commission spokesperson Eric Mamer said on Friday that Brussels was concerned about Kosovo’s decision to abolish the dinar and is asking for the transition period to be long enough to find a solution within the dialogue led by the EU.

The US State Department also stated the US was disappointed and opposes Kosovo’s plans to restrict the import of foreign currencies, including the dinar.