Saktaganova Indira Sovetovna,

Associate Professor, Department of Theory and History of State and Law, constitutional law, Candidate of Law

Eurasian National University of L.N. Gumilyov, Astana, Kazakhstan

Rysbekova Nazgul,

The 3rd year student of the specialty jurisprudence

of the Eurasian Humanitarian institute. Astana, Kazakhstan

Saktaganova Akmaral Bakytovna,

The 2nd year student of the specialty psychology of the Eurasian national university

Named after L.N. Gumilev, Astana, Kazakhstan

 

     The conditions in the economic sphere and monetary system after collapse of the Soviet Union are discussed in this work. Furthermore, this article describes and illustrates the formation of national currency of the Republic of Kazakhstan and its controls, main adopted laws related to the monetary system of Kazakhstan. In addition, the fluctuations in the rate of tenge towards ruble and dollar and significant factors of devaluation are included. Despite of this, the importance of the monetary system for the country and state economy is added in order to prove the topicality of the work.

After the collapse of the Soviet Union, various attempts were made by most former members of the Soviet Union to maintain a common currency. Some politicians were focusing on the relations among former Soviet republics. On the other hand, the another factors were the economic considerations for maintaining the ruble zone. However, to preserve strong trade relations between former Soviet republics was considered to be the most important goal.

                I would like to point out that the break-up of the Soviet Union was not accompanied by any formal changes in monetary arrangements. The Central Bank of Russia was authorized to take over the State Bank of the USSR (Gosbank) on 1 January 1992. It continued to ship USSR ruble notes and coins to the central banks of the fourteen newly independent countries, which had formerly been the main branches of Gosbank in the republics.

         The political situation, however, was not able to save a common currency. Maintaining a common currency required a strong political consensus in respect to monetary and fiscal targets, a common institution in charge of implementing these targets, and some minimum of common legislation (concerning the banking and foreign exchange regulations). These conditions were far from being met amidst the turbulent economic and political situation [1].

         During the first half of 1992, a monetary union with 15 independent states all using the ruble existed. Since it was clear that the situation would not last, each of them was using its position as «free-riders» to issue huge amounts of money in the form of credit. As a result, some countries were issuing coupons in order to «protect» their markets from buyers from other states. The Russian central bank responded in July 1992 by setting up restrictions to the flow of credit between Russia and other states. The final collapse of the ruble zone began when Russia pulled out with the exchange of banknotes by the Central bank of Russia on Russian territory at the end of July 1993.

            Since its independence in late 1991, Kazakhstan has consistently followed an economic course toward development of a free market economy. The 1991-1993 period may be described in general as a preparatory phase, laying the foundations of reforms of the republic’s inherited administrative-command economy. Significant economic reforms started in 1993, following the introduction of Kazakhstan’s national currency-the tenge. The term Tenge means «a set of scales» in the Turkic languages.

                As a result, Kazakhstan and other countries still in the ruble zone were «pushed out». On November 12, 1993, a decree of the President of Kazakhstan, «About introducing national currency of Republic of Kazakhstan», was issued. The tenge was introduced on 15 November 1993 to replace the Soviet ruble at a rate of 1 tenge = 500 rubles and 1 dollar was equal to 4,7 tenge. Consequently, November 15 is celebrated as the «Day of National Currency of Republic of Kazakhstan». In 1995, the first tenge printing factory was opened in Kazakhstan. Because, the first consignment of tenge was printed abroad, in the UK, while the first coins were minted in Germany [2].

         As a sovereign country, Kazakhstan made different attempts in order to join a world market economy. For this, creating a monetary system was very indispensable.

         The Republic of Kazakhstan aimed not only to initiate a monetary relationship with other countries, but also to enhance the state economy.

         Having been the member of the International Monetary Fund since 1992, Kazakhstan started to make its own monetary system in the way of Jamaica’s monetary structure, focusing on the rule of the International Monetary Fund.

         In order to create own monetary system, Kazakhstan declared a law about the currency regulation in the 14th of April, in 1993. However, at the beginning the country was not completely pulled out from ruble and this hampered cooperation with foreign countries. Moreover, this law had some drawbacks and limited the progress of representing national currency all over the world.

         That is why, in the 24th of December, in 1996 Kazakhstan adopted new law about the currency regulation.

         The all relationships between Kazakhstan and other foreign countries have been based on the adopted law.

         Despite of abovementioned law, the country adopted many laws in this spheres. For example,

· «The Law about monetary system of the Republic of Kazakhstan», December 13, 1993.

· «The Law about the National Bank», March 30, 1995.

· «The Law about Bank and Banking in the Republic of Kazakhstan», August 31, 1995.

· Charters of the President of Kazakhstan.

· «The Law about the currency regulation and control in the Republic of Kazakhstan», 2003 [3].

        According to the law, the objects of Kazakhstan monetary system are foreign currency, foreign stocks and the order importing precious metals to Kazakhstan. Consequently, the subjects are residents and not resident people.

       In concordance with the Kazakhstan law, buying and selling foreign currency were carried out by commercial banks and currency exchanges, which had been licensed by the National bank.

       In Kazakhstan, the main state agency that regulates the monetary system is National Bank. It carries out very economic deals and solves the problems related to the currency. For instance,

Ø                      Regulates a foreign currency and securities in a foreign currency;

Ø                      Defines the rules and contract that give an opportunity to residents to open an account in foreign banks and gives licenses for exchange transaction;

Ø                      Determines the rate of tenge towards other foreign currencies according to the worldwide market economy;

Ø                      Makes assets with gold and embody transactions with them;

Ø                      According to the state projects, it develops the relationships with foreign and international organizations.

       Public authorities and state agencies carry out currency control throughout the Republic of Kazakhstan. National bank and the Government of Kazakhstan are considered to be the public authorities, while the state agencies are authorized organizations that work, especially, with the exchange transactions.

       The exchange control is conducted in such directions:

Ø                      To make sure an exchange transaction is legal and has a particular license;

Ø                      To control that everything is according to the law when the residents make exchanges with foreign currencies;

Ø                      To watch there is an objectivity while not residents and representatives of other countries exchange their money to tenge [4].

         At the beginning of adopting new currency, international currency resource supported the way of creating own national currency in Kazakhstan and gave about $90 million Standby Letter of Credit (SLOC) to Kazakh National bank. Also Japan allocated $180 million to the Ministry of Finance of Kazakhstan in order to back up the process of new currency [5]. Overall, the reform about new currency in 1993 was accepted successfully. However, the next step was to control the work of Tenge throughout Kazakhstan and keep its stability. Unfortunately, each former member of the Soviet Union declared their own currency and this contributed to the financial crisis. After 2,5 months, exactly on the first of February in 1994, the rate of tenge towards dollar was decreased 2,5 times, then in the following months tenge fell down from 11,58 to 43,3 dollars. Taking account the last statistics, since our independence tenge has been devalued 30-40 times, which is very dangerous for Kazakhstan economy. Because the general state debt outnumbered the GDP of our country (General Domestic Product) and the National Bank allocated a particular sum of money in order to help get rid out of debts, consequently, this caused to the devaluation of tenge. However, nowadays, the government is trying to promote tenge and making the citizens to use tenge more and more. That is why, there are more interests for them, who want to keep their money in tenge in deposits.

         Today, Belarus, Russian Federation and Kazakhstan are cooperating together and increasing the level of relations between themselves. It is well known that they formed the Eurasian Union on the international arena. Consequently, the mutual currency is proposed from the Russian Federation, pointing out main advantages of this initiative. Nevertheless, this is very topical right now and discussed frequently among politicians. Even most people disapprove this proposal, mentioning its negative aspects for Kazakhstani Economy and, especially, for tenge. 

         These days, Kazakhstan strengthened the work of banks and keep it in the right way. Nevertheless, there is another danger. Because of the system of Globalization, plentiful foreign companies and plants are being opened in our country. Moreover, the level of import is rising year by year. Obviously, these factors will impact on our economy and result in the following devaluation of national currency [6]. To prevent this problem, our government is supporting and  proposing precious opportunities for the middle and small businesses to improve their products and increase their images. They have a chance to take a loan from the bank with low interests. Furthermore, our country is giving a hand them in their documents, decreasing a mountain of papers and replacing them with the computer. Because, now they are able to solve problems about such documents as licenses on electronic form very quickly and this, of course, can save their precious times. There is no doubt that if we can tackle such kind of predicaments on time, the role of tenge will increase on the international arena. Even after a few time, keeping this process of development, our currency is becoming popular and important in the Central Asia. In addition, by supporting state and national businesses, companies, we are able to promote the sense of patriotism among the people and pave the way to meet citizen’s needs in own Motherland.

         Contemplating all above mentioned statements and processes of development in the currency of Kazakhstan, our government is working hard in order to keep stability in the country and enhance the economy, financial system of Kazakhstan. Consequently, making stable the monetary system in the country plays an important role in the way of achieving the strategic goals of the Republic of Kazakhstan and strengthening economy, which is the main aspect of the government.

The list of using literatures:

1.                  Odling-Smee, J. (2001). «The IMF and the ruble area, 1991-93».

2.                 Dąbrowski, M (1995). «The reasons for the collapse of the Ruble zone».

3.                 «Finance and credit», The Kazakh State University, 2000.

4.                 «The monetary system of Kazakhstan», M. Kanatuly and S.N. Nurlanova.

5.                 «Exchange of money», Makysh S.B, 2004.

6.                 «The base of economic theory», Aubakirov Y., Narykbayev K., Eskaliev M., Zhatkanbayev E., Baizhumaev E., Doskaliev S., Almaty. 1998.