Euro Cash May Disappear From Circulation In Belarus

Banks actually lost the ability to exchange banknotes for new ones.

The import of cash euros into Belarus has reduced to almost zero in 2023 due to sanctions and other restrictions. At the same time, banks operate only with the currency that comes into circulation from the personal reserves of the Belarusian people. Especially for Myfin.by, financial analyst Vadim Iosub told about the risk of current restrictions resulting in a deficit of the euro cash in banks and increasing the exchange rate for cash in exchange offices.

According to the expert, a significant shortage of cash euros is not expected.

“Demand is also falling with restrictions and a decrease in supply. You can also remember that Belarusians traditionally save mostly cash dollars.

The main demand for cash euros was associated with tourist trips to European countries. Now the number of such trips has been greatly reduced, including difficulties linked to obtaining visas, and limited transport links, primarily air travel. So the demand for euro cash dropped significantly along with the supply.

You can see that this situation with the euro began two years ago. There was enough cash euro. There will be no shortage in the future,” the expert said

Can the exchange rate go up?

Vadim Iosub says that the exchange rate will not grow much because there will be no euro deficit.

“The second point is that we have had an unspoken recommendation from the National Bank for many years - to keep the exchange rate in a certain range from the official one, no more than 2%. I think that the recommendations are still in effect, and it is unlikely that the euro cash rate in banks will leave the official rate far behind,” Vadim Iosub said.

Where do banks get euro cash?

The financial analyst assumes that banks work with a turnover - they sell the currency that other citizens exchange.

“Also, if we allow a decrease in demand, then small currency funds go through Russia and other friendly countries. You can't bring a plane with the euro, but there are some small streams,” the expert noted.

What will happen to worn-out banknotes?

The situation with worn-out banknotes is more complicated. Banks actually lost the ability to exchange them for new ones.

“Previously, banks were collecting damaged banknotes to exchange them in correspondent European banks for new ones. It is difficult now. Few banks will take worn-out banknotes. I am not ready to specify the banks.