Montenegro and the Euro: implications for policy space

Lara Merling

Chapter 10 in Central Banking, Monetary Policy and the Political Economy of Dollarization, 2025, pp 257-276 from Edward Elgar Publishing

Abstract: Montenegro uses the euro as its official currency, which replaced the de facto use of the Deutsche Mark. This chapter will provide an overview of the implications of euroization for Montenegro's policy space, considering its unique circumstances as a small open economy in Eastern Europe, a region where all countries are at least partially euroized and most financial institutions are subsidiaries of eurozone member countries. This analysis provides a contrast between orthodox views on monetary policy and a post-Keynesian understanding of money and credit. Within this context, the chapter discusses how the full euroization of Montenegro played out, and what its policy space would be if it had a domestic currency and the ability to have its own monetary policy.

Keywords: Dollarization; Central banking; Monetary policy; Euro; Montenegro (search for similar items in EconPapers)
Date: 2025
ISBN: 9781803925325
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