Single currency as alternative way of dedollarization
By Laman Sadigova
Experts from Russia, Kazakhstan, Belorussia, Armenia and Kyrgyzstan continue their discussion on creation of a single currency in the Eurasian Union. The main problem, according to analysts, is a different degree of economic developments within the economic zone.
The possibility of creating a monetary union and a common currency was discussed at the design stage of the Eurasian Union project.
Forming a new single monetary union will allow members of the Eurasian Union not to depend on the laws and attitudes of third countries. This issue became especially relevant in light of today's problems in the relations between the U.S. and Russia.
Truth is, it is quite difficult to imagine such an alliance, considering the situation in which countries are now involved in. The main question now to be answered is whether Russia can become some kind of donor and stimulator within such a union. Turning the ruble into a regional currency has been an idea which continues to float however, as it could really boost regional trades and strengthen all country-members on a global level.
However, the ongoing devaluation of the ruble has complicated things and made discussions more difficult. The state of the currency depends on the energy sources and external economic relations.
Kazakhstan has already rejected the offer of the ruble becoming a single currency as it fears it will lose its independence to Russia. It claims, the Russian economy will swallow that of Kazakhstan, which economy is 14 times smaller than that of Russia. The economy of Belarus is only 3 percent of that of Russia.
The fact is that the national currency is a key feature of the country's sovereignty, and the leaders of Kazakhstan and Belarus have painfully reacted to the idea they could lose such a token of their independence.
In addition to problems linked to the formation of a single macroeconomic, finance and monetary, credit and fiscal policies in view of creating a single currency system, there are other issues to consider - for example which power will emit such a currency.
Undoubtedly, there can be only one center, and one common monetary policy, otherwise chaos will ensue. But who or what power will control that center?
It does not seem wise to give all the control to one of the CU leader, because it will face the discontent of the other members of the Union. On the other side, creating collective forms of control requires close coordination of all financial and economic policies, and this will require a great deal of time and patience.
Under the sanctions brought against Russia, the country is interested in extracting itself from under the economic and financial pull of the U.S. The idea of de-dollarization is now widespread in the post-Soviet space.
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