As a citizen of the Republic of Kazakhstan, I am against the introduction of a single currency on the territory of the Eurasian Economic Union.
I’ll explain why.
The introduction of a single currency will mean a centralized or, at best, coordinated monetary policy of the three countries.
This means that neither Mr. Kelimbetov, nor even Mr. Nazarbayev will decide how much tenge to print in Kazakhstan. It will be decided by Mrs. Nabiullina, or rather by Mr. Putin.
Why will this happen?
Because it’s logical. In the Eurasian Economic Union, Russia plays the leading role, if only because it is disproportionately larger than the other two allies. Compare: GDP of Russia in 2013 (before sanctions) amounted to 3.5 trillion US dollars, of Kazakhstan – 230 billion, of Belarus – 70 billion. That is, the economies of Kazakhstan and Belarus together make up less than one tenth of the Russian economy. Under such conditions, who will play a critical role in determining the size of the money supply in the common economy? Russia, of course.
What does this mean for us?
This means that neither the National Bank of Kazakhstan, nor the Government or even the President will be able to influence such important macroeconomic indicators of our country as inflation, income level of the population and subsistence minimum. All these indicators are measured in money, and now Moscow will print money. The more money is printed, the higher the price of goods and services, the poorer will be people who have fixed income in tenge (or altyns). These are state employees, pensioners, etc. And the fact that our three countries have different views at these things can be demonstrated by a simple example. Inflation in the last five years in Belarus was 10, 109, 22, 17, 16%. In Russia – 9, 6, 7, 6, 11%. In Kazakhstan – 8, 7, 6, 5, 7%.
Even if the money is printed in Almaty and Minsk as well, these two printing presses will be so “small” in comparison with Moscow they in no way will affect the total money supply. Rather, they can only aggravate the situation by launching an “arms race” and starting to convulsively print more money for their citizens, so that they go to neighboring countries and buy more goods faster than their inhabitants. This is what we observed in the early 1990s, before the introduction of national currencies. Without mutual trust, introducing a single currency is just preposterous.
And can we trust our partners?
I think not. I am not going to prove it for long. I will give just the most recent and vivid example. In 2014, Russia introduced sanctions against the EU and the US unilaterally, not only without coordinating with the allies, but having them notified only after the fact. What kind of trust and equality can you talk about in such an alliance?
Summarizing all of the above, I believe that the introduction of a single currency in the Eurasian Economic Union will limit our sovereignty and lead to negative economic consequences.