National Bank of Kyrgyzstan sees prospects of expanding use of national currencies in foreign trade

Business Materials 22 August 2011 21:09 (UTC +04:00)

Azerbaijan, Baku, Aug. 22 /Trend, V.Zhavoronkova, N.Ismayilova/

At the current stage of development, from a practical point of view, the promising direction may be to expand the use of national currencies in payments between economic agents, particularly in the countries of the Eurasian region and consequently, to reduce the use of the third currency, Deputy Chairman of the Board of National Bank of Kyrgyzstan Zair Chokoev told Trend.

"Analysis of the payment of currencies of EurAsEC shows that the role of national currencies in trade of these countries is gradually increasing, but a significant predominance is still given to the main reserve currency - the dollar," said Chokoev.

According to him, currently there is an opportunity to conduct trades in Ukrainian hryvna, Kazakh tenge and Belarusian rubles for Russian rubles. Further, other states of Eurasia can participate in trading in national currencies. Creation of such infrastructure can provide the conditions of direct quotes of regional currencies and the abandonment of the dollar application for the cross rate. Ultimately, it will reduce transaction costs.
"However, other prerequisites are also required to create conditions for transition to trade in national currencies. There is an understanding that the difference in the scope and depth of the national currency, and in a broader context - the financial markets, makes it difficult to provide direct quotations of national currencies. In this regard, there is a need to examine the conditions of mutual access of economic agents to currency markets in the region's countries, the possibility of free convertibility of currencies, ensure the development of the exchange infrastructure," he said.
According to him, an important condition of success of the possibility of using national currencies in the calculations is the integration of payment systems. Another tool for expanding the currency interaction can be the possibility of concluding currency swaps between central banks. The practice of using such swap agreements is currently being implemented by the People's Bank of China.
"An essential factor is the formation of the unified information space in the financial sector in the Eurasian countries, serving as a platform to discuss urgent issues of regional economic and financial system," he said.
According to him, Kyrgyzstan is a country with an open market economy, carrying out foreign trade operations with more than 120 countries. In carrying out foreign trade operations, the economic agents use a variety of world currencies, mainly dollar, Russian ruble and Kazakh tenge and the euro.