The Kosovo Police closed six branches of a Serbia-licensed bank on Monday, enforcing a ban on the use of the Serbian dinar currency in the country. This move has escalated tensions between Kosovo and its neighbor, Serbia.

The police statement announced the closure of the Postal Savings Bank branches, following a request from financial institutions questioning their legitimacy and based on authorization from the prosecutor’s office.

On February 1, the government mandated the adoption of the euro currency in areas of Kosovo predominantly inhabited by the ethnic Serb minority, aligning with the rest of the country, and discontinued the use of the Serbian dinar.

The implementation of this decision was postponed for approximately three months due to pressure from the EU and the United States, who expressed concerns about its potential negative impact on the ethnic Serb minority in northern Kosovo.

In Kosovo, the euro is widely used, despite the country not being a member of the EU. However, in northern Kosovo, where the population is predominantly ethnic Serb, the dinar remains in circulation. Many Serbs in the region rely on financial assistance from the Serbian government, often distributed in dinar cash.

Brussels and Washington urge both nations to implement agreements reached in February and March of last year between Serbian President Aleksandar Vučić and Kosovo Prime Minister Albin Kurti.

The normalization talks facilitated by the EU have made limited progress, particularly following an incident last September involving masked Serb gunmen and Kosovo police, which resulted in four fatalities and heightened tensions.

Serbia and Kosovo have both expressed their aspiration to join the EU, but the bloc’s foreign policy chief, Josep Borrell, has cautioned that their resistance to compromise jeopardizes their prospects.

Serbian forces engaged in a war against ethnic Albanian separatists in 1998-99 in what was then the province of Kosovo. The conflict claimed the lives of approximately 13,000 individuals, primarily ethnic Albanians, and culminated in a 78-day NATO bombing campaign that forced Serbian forces out. In 2008, Kosovo proclaimed independence, which Belgrade continues to contest.