Russia must overcame its dependence on oil exports first and then create single currency zone, the ex-minister says.
The introduction of the single Eurasian currency is unprofitable for Russia and other countries of the Eurasian Economic Community. This was stated by former Russian Finance Minister Alexei Kudrin in response to the offer of Prime Minister Dmitry Medvedev to think about creating some single currency in the territory of the Eurasian Economic Community.
“I do not see the idea as promising,” said Alexei Kudrin to reporters on the sidelines of St. Petersburg International Economic Forum.
According to Alexei Kudrin, a number of the EurAsEC members have no sovereign financial ratings, which testifies, as he said, to the poor quality of financial systems in these countries.
“If they are now involved in a common space, it will lead to a significant deterioration in the quality of the Russian ruble,” says ex-finance minister of Russia — RIA Novosti.
However, many of these countries are not able to independently raise funds in foreign markets and turn to the IMF, Alexei Kudrin reminded. According to him, their financial systems are in permanent crisis. The expert said he did not consider it necessary to engage countries, being in constant financial crisis, into a single currency area.
Based on the experience of the EU, the construction of a monetary union should be linked to stringent financial policies and budgetary constraints with the general principles of fiscal policy. Russia will have to set guidelines for these countries and be in a constant conflict with them, forcing them to implement these restrictions.
The fx rate of the countries, included in this monetary union, will depend on Russia’s main indicators. It means that the rate will either be strengthened against the need of these countries, or it will be eased off too much.
“I think it would not be beneficial to these countries,” said Kudrin.
Alexei Kudrin believes that Russia itself is not ready to invite the other EurAsEC countries in such a Monetary Union, since its budget is still highly dependent on oil. Thus, it must first overcome this addiction and not expose other countries to such risks.
He also noted that Russia shall abandon this idea for the next ten years.
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