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Credibility and Convergence: Did Euroization Deliver for Montenegro?

Author

Listed:
  • Lara-Greta Merling

    (The Bucharest University of Economic Studies, Romania)

  • Kevin M. Cashman

    (Center for Economic and Policy Research)

Abstract

Using Montenegro as a case study, this paper evaluates the viability of currency substitution, in this case euroization, as a response to increased financial volatility. Proponents of euroization outline a series of expected benefits, while critics point to what they perceive as much larger costs. The paper contrasts the macroeconomic developments of Montenegro and how it fared during the Global Financial Crisis and the shock triggered by the Covid-19 pandemic with the performance of its regional peers and the euro area overall. The findings are contrasted to how the various expectations played out for Montenegro, drawing further lessons on the role of monetary policy and domestic monetary sovereignty.

Suggested Citation

  • Lara-Greta Merling & Kevin M. Cashman, 2023. "Credibility and Convergence: Did Euroization Deliver for Montenegro?," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 132-136, August.
    • Handle: RePEc:ovi:oviste:v:xxiii:y:2023:i:1:p:132-136
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    References listed on IDEAS

    as
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    5. Philip Arestis & Malcolm Sawyer, 2006. "The nature and role of monetary policy when money is endogenous," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 30(6), pages 847-860, November.
    6. Eduardo Borensztein & Andrew Berg, 2000. "Full Dollarization; The Pros and Cons," IMF Economic Issues 24, International Monetary Fund.
    7. Mr. Eduardo Borensztein & Mr. Andrew Berg, 2000. "The Pros and Cons of Full Dollarization," IMF Working Papers 2000/050, International Monetary Fund.
    8. Mr. Eduardo Borensztein & Mr. Andrew Berg, 2000. "Full Dollarization: The Pros and Cons," IMF Economic Issues 2000/004, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    monetary policy; Euro; currency substitution;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • F30 - International Economics - - International Finance - - - General

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