Should Kazakhstan join a monetary union?

Abstract

In order to answer whether Kazakhstan should or should not join a monetary union, this project gauges the practical ideal type of a monetary union that brings a fair, stable and prosperous exchange rate arrangement. In doing so, it reveals common criteria of such union via careful literature review. Then it compares Kazakhstan‟s current state against these practical criteria using necessary research methods. The evidence suggests that a monetary union within the EAEU is considerably far from its practical ideal type, as most of the revealed criteria are not fully satisfied. Thus, a monetary union within the EAEU would not be feasible for Kazakhstan. Nevertheless, a monetary union between Kazakhstan and Russia might become feasible, but not necessarily beneficial for Kazakhstan in the long-term perspective. These countries might actually experience endogenous real convergence if necessary institutional reforms were made in both countries, thereby increasing the sustainability of a fixed exchange rate arrangement between them.