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PRISTINA, Nov 16 (Reuters) - Kosovo's international administration announced the first steps on Wednesday towards setting up a banking system, intended to lay the groundwork for efforts to revitalise the territory's ruined economy.
The administration said it was creating a body with many of the powers of a central bank, although it will not be able to issue its own currency, and was inviting applications from commercial banks wishing to operate in the province.
The new body, the Banking and Payments Authority of Kosovo (BPK), will act as a banker to the United Nations-led Kosovo administration and also supervise the banking sector.
``I know that the history of banking in this region has been fraught with painful experiences, often resulting in huge financial losses. This must not happen again,'' Nick Brentnall, the managing director of the new authority, told a news briefing.
``With BPK, we now have the opportunity to build a new banking system -- a sound, honest system, a banking system in which the people of Kosovo can place their trust,'' he said.
Many Kosovars lost large amounts of savings as the old Yugoslavia broke up at the start of the 1990s and its state-run banking system was unable to cope without freezing assets.
Since then, a cash-dominated economy has operated in Kosovo as locals have had no confidence in the banks.
This situation was exacerbated by the fact that the banks were run by Serbs, mistrusted by Kosovo's ethnic Albanian majority as a result of state-sponsored Serb repression which was only brought to an end by NATO bombing earlier this year.
Officials see modern banking in Kosovo as crucial to their plan to establish a Western market system in place of a state-controlled economy effectively destroyed by war, mismanagement and mistrust.