Kosovo’s central bank announced on January 31 the voluntary conclusion of banking activities by the Serbian unit of Komercijalna Banka in North Mitrovica.

This decision was made after the central bank officially designated the euro as the primary currency for transactions, departing from the longstanding use of Serbian dinars starting from February 1.

A supervisory dialogue was held in August-September 2023, leading to the formulation of a comprehensive voluntary liquidation plan for Komercijalna Banka in Kosovo.

The Central Bank of Kosovo (CBK) said that following a revision, the plan was approved by the CBK last October, followed by the decision on January 9, 2024, to close all branches and sub-branches of Komercijalna Banka AD Beograd in Kosovo, effective from January 31.

Licensed by the CBK in 2007, Komercijalna Banka has been operating in Kosovo through its branch in Mitrovica and eight additional sub-branches.

With the expiry of the deadline for banking operations involving citizens at the close of January 31, 2024, all bank deposits to citizens have been officially terminated.

The CBK sought to allay concerns about banking services for the population of northern Kosovo. It estimates that a sufficient number of currently operating bank offices, financial institutions and non-banking entities effectively cover the financial needs of the community in all cities of the country.

In the meantime, Kosovo’s government supported the central bank in its decision to make the euro as the sole official currency in Kosovo, excluding the Serbian dinar used in the north by the Serb minority.

During a news conference on January 31, Deputy Prime Minister Besnik Bislimi reiterated the government's stance, saying that "the euro has been and will be the only official currency". 

However, he clarified that punitive measures will not be enforced starting February 1. Instead, there will be a focus on informational initiatives aimed at Serb citizens.

Bislimi outlined that the new CBK regulation has two primary objectives: safeguarding financial integrity and ensuring the protection of consumers and the payment system. He said that the regulation neither permits nor prohibits the Serbian dinar, as its use was not authorised in the first place.

Addressing concerns related to the impact of the regulation, Bislimi acknowledged potential challenges for citizens receiving transfers from Serbia through illegal structures operating in the market. Additionally, businesses that have conducted transactions in dinars without proper registration and taxation pose a concern.

"No citizen has reason to fear the implementation of the new CBK regulation," said Bislimi. He revealed that the government's oversight mechanisms will prioritise investments in information dissemination. Commercial banks have been directed to establish branches in the region.

Furthermore, Bislimi disclosed that the government has requested the CBK management to establish a communication line with the National Bank of Serbia, aiming to devise a transparent mechanism for fund transfers.