SINGLE CURRENCY DEBATE: EEU MONETARY UNION PLANS DISCUSSED IN ARMENIA

ECONOMY | 24.03.15 | 10:16

By GAYANE MKRTCHYAN
ArmeniaNow reporter

The latest statements about the possibility of the Eurasian Economic
Union’s (EEU) transition to a single currency have sparked debate
among economists in Armenia.

Speaking at a March 20 summit of EEU leaders Russian President Vladimir
Putin suggested starting negotiations on the matter of forming a
monetary union. The leaders of Russia, Belarus and Kazakhstan said
they will continue discussions in Moscow in May when the leaders of
Armenia and Kyrgyzstan are expected to join them.

Meanwhile, Armenian and Russian experts discussed the issue during
a Yerevan-Moscow Skype conference organized by Media Center. All
of those participating in the discussion agreed that the idea of a
single currency is “in embryo” yet. Economists said time is needed
to create a single currency – at least a few years before the EEU
member states can reach comparable levels of economic development.

Bagrat Asatryan, who headed Armenia’s Central Bank in 1994-1998, said
that Putin’s statement in Astana had a purely political implication
and was not economically justified.

“It is clear that if a single economic space is formed, the result
should be a single currency. Without it the union cannot be effective.

In this case, I am afraid that the politicians talk about it
prematurely,” said Asatryan.

“If our future is in the EEU, if it is a successful project –
something that I highly doubt – I believe that the decisions should
be more calculated,” said the former Central Bank chairman, advising
that the European Union’s 40-year experience of introducing a single
currency should be examined.

Economists remind that the idea of introducing the Euro had been
discussed for several years and the Euro zone expanded gradually. New
members joined the monetary union only after several years of
membership and after meeting certain criteria. Earlier, it was said
that the EEU members had agreed to discuss the issue after 2025.

“As long as no unified fiscal policy bodies have been established,
there is no uniform policy, it is too early to speak about the single
currency,” said Asatryan.

Moscow-based economist Alexander Knobel also pointed out the
differences in the levels of economic development of EEU member
states. He said that both the philosophies of economic development
and per capita GDPs in these countries vary. The lively discussion of
the issue now shows that the decision to switch to a single currency
is a political one.

“Integration within the EEU is guided by political motives. A number
of processes within the Union are ahead of economic expediency, and
the more intense these processes are, the more significant resources
one of the countries will have to invest. One can assume that this
country will be Russia,” he said.

In Asatryan’s opinion, the more immediate task should be taking the
economies of the EEU member states out of the current crisis. “And
after that one can think about the future,” he concluded.