Eurasian central bank cooperation taken up a notch

Representatives from the central banks of Armenia and Kyrgyzstan attended a regional meeting on foreign exchange policy for the first time ever last week, in the wake of the Bank of Russia's decision to let the ruble float.

Their attendance at the 'Advisory Council' meeting reflects the growing cooperation of central banks in the region, ahead of the introduction of the Eurasian Economic Union on January 1, 2015.

Comprising Belarus, Kazakhstan and Russia, the union will be one of the most advanced institutions for cooperation in the region created since the fall of the Soviet Union.

The three countries already share a Single Economic Space and have been working on lifting internal barriers to trade for years. Their central banks are also heavily involved in the process of regional harmonisation.

Although talk of a single currency in the region has quietened down in the wake of the eurozone's troubles, the national central banks meet regularly to discuss foreign exchange policy.

The latest meeting, held on November 14, saw senior officials from the three central banks discuss "the current economic situation" and "efforts to harmonise national legislation in the financial sphere".

For the first time since the council was established in April 2012, the central banks in Armenia and Kyrgyzstan participated, as guests. Whether they will become a permanent fixture is unclear.

They will have had plenty to talk about, following the Bank of Russia's decision to abandon the ‘trading band' it used to manage the value of the ruble following a heavy depreciation of the currency against the US dollar.

Currency crisis will not be a new topic for the council – the National Bank of Kazakhstan was forced to devalue the tenge by 19% in February 2014.

In a statement released today, the National Bank of the Republic of Belarus said the council members "agreed to promptly inform each other about changes in the foreign exchange policy mechanisms". It is unclear if the Bank of Russia's decision may have caught others off guard.

Moreover, the members "reached a consensus on the need to continue efforts to define the format and the timetable for joint actions to harmonise legislation in the financial sphere".

Both Armenia and Kyrgyzstan could join the Eurasian Economic Union. Armenia looks set to join by the time it launches next year, while Kyrgyzstan officials appear to be undecided on whether to apply for membership.

Russian president, Vladimir Putin, said the union "offers free movement of capital, goods, services and labour, and broad opportunities for coordination and exchange of technology and investment", at a recent Asia-Pacific forum.