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Russia to fill Abkhazia up with small money14.09.2011 | 11:37
Sensational information appeared in the news bulletins: Bank of Abkhazia may obtain the right to issue Russian currency. So far, this is only theory but, nevertheless, the news came as much unexpected. GeorgiaTimes correspondent asked Russian experts if there are any precedents when Russian or other money was printed not only by the "owning country" but its neighbours as well. Our interlocutors readily forecast the possible case scenarios.
The point at issue, however, is only small money: five and ten-ruble coins. The problem lies on the surface and looks quite common: Abkhazia lacks small money to use in retail chains and service industry. Ten-ruble paper bank notes are gradually taken out of circulation, for they are too old and can be replaced by small money. But the problem is that small money does not get into the republic. The issue of small money is still urgent even in many Russian regions, not to mention Abkhazia that also uses Russian ruble.
Earlier, National Bank of Abkhazia solved the issue in the following way. The republic's credit institutions applied to the main bank of the country and the bank representatives delivered these applications to Sochi where the local cash settlement hub of the Russian Central Bank helped the Abkhaz colleagues solve their cash problem. For the last time, Abkhaz bankers appealed for such help ten days ago but did not receive any: Russian banks also lack small cash.
In fact, the lack of small cash creates a lot of difficulties. Food shop assistants complain about being unable to issue change for fifty rubles when selling bread. Prices have been rounded for that purpose - naturally, upwards, which is non-beneficial for customers. You won't find price labels reading 18 or 42 rubles; instead, you have to pay 20 or 50 rubles.
However, a compromise seems to be found. In November, Bank of Abkhazia will be able to order five- or ten-ruble coins in Russian mints. This will bring the long-awaited small money to the republic, especially that many people don't even know what a copper 10-ruble coin looks like.
Deputy Chairman of National Bank of Abkhazia Emma Tania made a much more politically important statement in an interview to Echo of Caucasus. She reported that in foreseeable future, Abkhazia will produce Russian money on its own. We are not talking about the full production cycle; according to Tania, the republic will only mint coins. But that's already a sensation. "There are certain schemes of solving this problem basically so that we would not depend on coins delivery or their availability in Krasnodarsky region in the cash settlement center of Sochi. Our colleagues proposed issuing small coins by Abkhaz Bank and their proposal was discussed, so I hope it will solve our problem", - said Deputy Chairman of the republic's National Bank.
Should Russia and Abkhazia take a relevant decision, it will be a revolutionary innovation for the Russian financial system. There is a number of cash emission standards in Russia. One of them says that Central Bank is the only institution in the country that emits cash money, putting it in and withdrawing it from circulation. Bank of Russia is a monopolist of these operations in the territory of RF. However, there has been no precedent when Russian money was minted in other countries' territory and, perhaps, Abkhazia is going to create it.
GeorgiaTimes asked Russian experts to comment on the situation. In the opinion of Director of the Banking Institute at the Higher School of Economics Vasily Solodkov, such precedents exist but not in the ruble zone.
"Eurozone may surely be viewed as a precedent where each country has its coins minting quota. This quota is defined by a special limit of the European Central Bank. Such way out is possible in our case as well, provided that a relevant agreement is signed and the parties define the cash quota for the Abkhaz mint. A similar precedent could be created in the ruble zone, by the way. Negotiations were once held about giving a Russian currency quota to Belarus. But the rules should be clearly stated. On one hand, independent emission in Abkhazia won't affect the general macroeconomic situation, for we are talking about the volumes that are insignificant for the Russian economy. On the other hand, small flaws may have sad consequences when the issued monetary stock, for instance, will return to Russia to be cashed as larger currency notes", - Vasily Solodkov explained.
Director General of the Political and Economic Communications Agency Dmitry Orlov holds to another opinion. He is against the prospect of sharing the coins minting function with Abkhazia. "That's abnormal and we've got no such precedents in Russia. I see the ruble emission monopoly as one of the tools ensuring our country's sovereignty and I regard the transfer of such functions to any foreign state, including Abkhazia, as the violation of economic sovereignty", - Orlov said.
An utterly unexpected situation with Abkhazia minting Russian coins won't be missed by the media and we are also going to watch the events. Now it is the Abkhaz experts' turn to voice their opinion.