Montenegro and the euro

Eurozone participation
<dt class="glossary " id="European Union (EU) member states" style="margin-top: 0.4em;">European Union (EU) member states
  19 in the eurozone.
  7 not in ERM II, but obliged to join the eurozone on meeting convergence criteria (Bulgaria, Croatia, Czech Republic, Hungary, Poland, Romania, and Sweden).
  1 in ERM II, with an opt-out (Denmark).
  1 not in ERM II with an opt-out (United Kingdom).
Non-EU member states
  4 using the euro with a monetary agreement (Andorra, Monaco, San Marino, and Vatican City).
  2 using the euro unilaterally (Kosovo[lower-alpha 1] and Montenegro).

Montenegro has no currency of its own. From 1996 the Deutsche Mark was the de facto currency in all private and banking transactions[1] and it was formally adopted as Montenegro's currency in November 1999.[2][3] The mark was replaced by the euro in 2002[2] without any objections from the European Central Bank (ECB).[4]

The European Commission and the ECB have since voiced their discontent over Montenegro's unilateral use of the euro on several occasions, with Amelia Torres, a spokesperson for the European Commission, saying "The conditions for the adoption of the euro are clear. That means, first and foremost, to be a member of the EU.”[5] A statement attached to their Stabilisation and Association Agreement with the EU read: "unilateral introduction of the euro was not compatible with the Treaty."[6]

The EU insists on the strict adherence to convergence criteria (such as spending at least 2 years in the ERMII system) which are not negotiable before euro adoption, but have not intervened to stop the unilateral use of the euro by Montenegro.[5][7] The EU has raised concerns of Montenegro's state debt, which had risen to 57 percent of GDP by 2011.[7]

Officials from the Central Bank of Montenegro have indicated on several occasions that the European institutions do expect them to strictly follow ERM rules, particularly because of their EU accession process.[7][2] Nikola Fabris, chief economist of the Central Bank of Montenegro, has said that the situation was different when they adopted the euro, and that other states which were considering unilaterally adopting the euro, such as Croatia and Bosnia and Herzegovina, would face sanctions from the EU and have their accession process suspended if they went ahead.[2]

On 17 December 2010 Montenegro was granted candidate status to join the European Union. The issue is expected to be resolved through the negotiations process.[5] The ECB has stated that the implications of unilateral euro adoption "would be spelled out at the latest in the event of possible negotiations on EU accession."[6] Diplomats have suggested that it is unlikely Montenegro will be forced to withdraw the euro from circulation in their country.[4][6] Radoje Žugić, Montenegro's Minister of Finance, has stated that "it would be extremely economically irrational to return to our own currency and then later to again go back to the euro."[8] Instead, he hopes that Montenegro will be permitted to keep the euro and has promised "the government of Montenegro will adopt some certain elements which should fulfil the conditions for further use of the euro, such as adopting fiscal rules."[8]

Unlike official members of the eurozone, Montenegro does not mint coins and therefore has no distinctive national design.

See also

Notes

  1. ↑ Kosovo is the subject of a territorial dispute between the Republic of Kosovo and the Republic of Serbia. The Republic of Kosovo unilaterally declared independence on 17 February 2008, but Serbia continues to claim it as part of its own sovereign territory. The two governments began to normalise relations in 2013, as part of the Brussels Agreement. Kosovo has received recognition as an independent state from 110 out of 193 United Nations member states.

References

  1. ↑ "Montenegro's euro challenge". BBC. 2002-01-03. Retrieved 2007-11-17.
  2. 1 2 3 4 "Montenegro Warns Against Unilateral Euro Adoption (Update1)". Bloomberg.com. 2009-04-21. Retrieved 2011-09-09.
  3. ↑ ideas.repec.org: "The History of Money in Montenegro", by Nikos Fabris. Journal of Central banking Theory and Practice v4 n1 p5-18
  4. 1 2 "EU to question Montenegro's use of euro". 2007-10-08. Retrieved 2013-02-19.
  5. 1 2 3 "EU warns Montenegro over Euro". B92. 2007-10-10. Retrieved 2011-09-09.
  6. 1 2 3 "Montenegro heading for EU membership". 2007-10-24. Retrieved 2013-02-19.
  7. 1 2 3 "EU prijeti Crnoj Gori ukidanjem eura: Niste sposobni za našu valutu" [EU threatens revoking the euro from Montenegro: You're not capable enough for our currency] (in Croatian). Index.hr. 2011-06-01. Retrieved 2011-09-09.
  8. 1 2 "Montenegro's peculiar path to EU membership". 2013-02-07. Retrieved 2013-02-19.
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