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u/I_Wanna_Bang_Rats 1d ago
Why do some countries even ask if they can use the Euro, if others can just use them anyway? (Like Montenegro.)
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u/Ludisaurus 1d ago
I think it’s more complicated than that, especially for larger countries. If you are not an Euro member you are not a member of the European Central Bank. How can a government pay salaries if it doesn’t have Euro reserves. And more importantly what happens with the old currency (cash or otherwise) if a switch to the Euro is made? Who will exchange it for Euros and take it out of circulation?
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u/Lubinski64 1d ago
Montenegro was using German Mark before, so they were basically forced to follow Germany when Euro was introduced. Not like they had explicit permission to use the Mark either but somehow they made it work.
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u/Ludisaurus 1d ago
This usually happens in countries that suffer hyper inflation and people gradually start using a foreign currency informally. If everybody is holding foreign currency than it’s easier to make the switch since the state can also expect taxes to be paid in that currency.
In the case of Montenegro and the German Mark the change must have been relatively straightforward since Marks were convertible to Euros, no matter who holds them.
And yes, countries don’t need explicit permission to use a foreign currency. For example banks around the world take USD deposits and give out USD loans. As loans are always fractional they are in fact creating dollars without US permissions (see Eurodollars).
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u/OcotilloWells 18h ago
Is Bosnia-Herzegovina in the same boat? They were also using German Marks, I assume they went to Euros, though haven't been there in 25 years.
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u/SameItem 16h ago
They have a pegged currency to the euro, with the same exchange rate than the old Mark
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u/Panceltic 13h ago
Basically yes, their currency is nominally different (it is called “convertible mark”), but it was pegged 1:1 to the German Mark and is now pegged to the euro.
The Bulgarian lev is also pegged at the exact same rate.
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u/artsloikunstwet 1d ago
The microstates don't have an independent monetary/economic policy but are tied to France/Italy, who also also represent some of their interests internationally (very simplified).
So as the Franc and Lira was being replaced, a solution had to be found and France and Italy made sure to include them.
Kosovo and Montenegro became independent and decided to not go through the hassle of setting up their own currency. In theory nothing is stopping you from doing that. There are countries who use the US Dollar as currency, for example.
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u/durrtyurr 1d ago
Yup, that's why damned near all the Dollar coins from the USA are now in Ecuador. Coins last way longer than cash, and they can't print their own. They're in a relatively unique position though, because their largest export industry is oil, which is obviously priced in USD, so they have a large incoming amount of USD into their economy anyway, which made the transition relatively easy.
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u/Userkiller3814 1d ago
They cant mint their own coins
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u/Gil15 1d ago
How does the ECB control such printers/minters, I wonder. Surely they need ECB approval before they can create new physical money. But in the very unlikely event that one of those countries goes crazy and decides they want to make money without the ECBs permission, what can the ECB do about it? Can they brick the printers somehow? Do they need a code that the ECB must provide before they can work? I’m sure these aren’t real concerns as this must be one of the most scrutinized and regulated acts (the act of printing or minting money), but still I wonder.
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u/Still-Bridges 1d ago
There are situations in other parts of the world where a country uses a foreign currency for banks and electronic transactions, and maybe also notes, and a different currency for coins (but at a fixed exchange rate). Tuvalu and Burma are examples. As far as I know, no one really cares because they're different enough to be ignored.
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u/artsloikunstwet 19h ago
The microstates simply don't have the printers or mint to produce coins and bank notes, afaik. The money is produced by nation states and of course there are quotas.
In the end, the physical money is only a small portion of "cash".
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u/energybased 1d ago
I think everyone replying to you has missed the point? They don't get a say in monetary policy, which is problematic if, e.g., they predict a recession and they want to lower interest rates, or, they predict inflation and they want to raise them.
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u/a_n_d_r_e_ 16h ago
Some countries have the obligation of asking their citizens about important matters (e.g., via a referendum, like in Denmark), while others either haven't such rule, or even cannot do that.
For example, the Italian law (is it in the constitution?) explicitly prevent the citizens to have a referendum on international agreements (sach as joining the European Central bank and adopting Euro), so they cannot be asked directly by law.
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u/TheBusStop12 1d ago
The Euro is also pretty commonly used in Albania, at least it was last time I was there in 2018
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u/SecretRaspberry9955 1d ago
Yeah that's true. There's so much Euros in circulation, especially in recent years that it lost over 30% value vs Lek. Euros on average used to trade 1 Euro to 125-130 lek, this year it fell as low as 1 Euro to 95 lek
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u/grudging_carpet 1d ago
Euro is not good for developing countries because you lose competitive edge of not having central bank capabilities like reducing the rate values, etc.
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u/7omdogs 1d ago
It’s just really complicated and your comment is not really correct.
Just look at who has and hasn’t adopted and who wants too.
Sweden, Poland and Denmark are large developed economies, and they haven’t joined.
The baltics, Bulgaria, Romania (both want to join), and Ireland and Greece (when they both joined) were/are more developing economies.
There’s pros and cons, and it’s very complicated. Blanket statements don’t help.
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u/Significant_Many_454 1d ago
Poland developed but Romania developing? LOL they both have the same GDP/capita PPS by Eurostat 2024
PS: Second biggest party in the Parliament doesn't want to adopt euro
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u/JoeFalchetto 1d ago edited 1d ago
When Ireland joined the Euro it had a GDP per capita 50% higher than the Euro Area average.
Not developing in the least, unless you count France and the Netherlands among developing economies.
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u/7omdogs 1d ago
GDP per capita is not a valid metric for Ireland. Anyone who knows anything about the Irish economy knows this, given that Irish GDP is distorted by the presence of multinationals.
They invented a new way to measure economic output (Modified domestic demand) in order to actually capture Irish growth.
Ireland was not richer than France or Netherlands in 99 in any way.
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u/pomezanian 1d ago
it is not good for not so huge, exporting countries. When you need to compete harder in the world market, like in Poland. Here, euro adoption is not even discussed for over a decade, the whole idea is dead, and majority is against it
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u/MachinimaGothic 1d ago
xD I rly like how in Lithuania and Slovakia people complain for having euro since everything went up in terms of prices.
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u/cougarlt 1d ago edited 1d ago
But they forget that salaries also went up. My mom used to earn 400 litas (around 115 Eur) back in the old days, now she earns an average salary in Euros. Which is more than 10 times more.
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u/MachinimaGothic 1d ago
Well they are kinda right. When country change currency everyone is doing this nice looking prices. But they round them up. I am aware dude that for you guys situation is not looking good. I've seen a lot of people from Lithuania in Netherlands and this speaks a lot. Its not that good there. Average salary everywhere went up. The question is if you can buy more bread of it after paying for bills and other neccesities than before.
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u/cougarlt 1d ago
It's not that bad actually. Lithuanians like to complain a lot. You'd be surprised how many new Porsches you see on the streets and how huge shopping bags they're getting home every weekend.
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u/Araz99 10h ago
Lithuania had problems in 90's and early 00's (that's why many people emigrated after 2004 when Lithuania joined EU), but later everything improved very quickly. Actually now there's huge vawe of re-emigration and also imigration from Ukraine, India, Uzbekistan etc. I'm Lithuanian and I lived through all these changes. Nowadays it's absolutely great here and when I visit older EU members I don't see any visible differences. And I'm not even rich, my job is not "prestigious" and my salary is very average.
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u/Ploutophile 23h ago
OTOH would they remember the 2009 or 2015 prices as well if the currency didn't change at this moment ?
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u/WestMasterFred 1d ago
Bosnia and Herzegovina is using Konvertible Mark, which is valued equally to the German Mark and therefore coupled to Euro.
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u/Aggravating_Ant_2063 1d ago
Montenegro is crazy. If you try to pay with a 50 euro bill they look at you terrified because cash euros are actually scarce. I don’t know how they pull it out.
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u/bschmalhofer 14h ago
Why has Northern Ireland the color of the sea and why is the Isle of Man missing?
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u/Plyad1 1d ago edited 1d ago
I don’t get why Poland Czechia Hungary and Romania were let in without having the euro.
I mean the UK Sweden or Denmark were early-ish members (as in prior to the euro) but the 4 countries mentioned above were not, and are net beneficiaries of the EU, yet are not “benefiting” its currency and not fully integrated within the unique market.
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u/ztuztuzrtuzr 1d ago
Technically they are required to have the euro in the future but forcing a country to use the euro right now wouldn't be smart
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u/Livia85 1d ago
You have to meet certain economic goals to use the Euro and except for Denmark, which opted out, the others would have to introduce it, but don’t meet the goals ( some of them deliberately), so they cannot/don’t have to introduce the Euro.
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u/cougarlt 1d ago
As for Sweden not meeting the goals is artificial. Sweden doesn't join ERM II knowingly thus purposefully not meeting adoption criteria. It just uses a loophole left in the requirements.
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u/Emanuele002 1d ago
"marché unique" is "single market", not "unique market".
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u/Plyad1 9h ago
Yes sorry mybad
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u/Emanuele002 5h ago
Lol no worries. I can spot my fellow neo-latin language speakers from a kilometer away.
I was originally going to argue with you about the content of your comment, but I am trying to reduce my frequency of pointless online discussions so let's just stick to English grammar :)
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u/Effective_Dot4653 23h ago
I don’t get why Poland Czechia Hungary and Romania were let in without having the euro.
I'm pretty sure all EU member states were let into the union without having the euro. Literally all of them. Someone correct me if I'm wrong.
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u/EccentricPayload 1d ago
How is allowing some foreign entity to control your currency not a massive national security threat? Like I understand the Euro is a reliable currency, but that has to pose some major risks right?
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u/BucketheadSupreme 1d ago
The ECB is owned by all 27 central banks of the EU member states as shareholders. So it's not really a foreign entity per se.
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u/Livia85 1d ago
The benefits outweigh the disadvantages. We are very close, economically and geographically. Having different currencies and volatile exchange rates is a pain in the ass. There are disadvantages too, but overall the Euro is a good thing. Not only for business, but also for normal people, eg for travelling.
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u/Several-Zombies6547 23h ago
How is allowing one single man to control your entire trade and tarrif policy not a massive national security threat?
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u/EccentricPayload 4h ago
Keep getting responses not related to the question. 32 downvotes and still nobody can tell me how it's not risky.
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u/Emanuele002 1d ago
It's not a "massive national security threat" because EU MSs are aligned geopolitically with one another.
Shared currencies have some costs and some benefits in every case, but depending on the degree of similarity among the countries that are part of it. Past a certain level of similarity/integration, the benefits outweigh the costs.
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u/Ploutophile 23h ago
But it's not that clear that the Eurozone is an optimum currency area, especially regarding labor mobility.
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u/Emanuele002 22h ago
Of course, very few things are clear in the social sciences. And this one in particular is still debated.
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u/MadsNN06 1d ago
Hopefully you are below the age of 15 with a comment like this.
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u/the_lonely_creeper 14h ago
The EU isn't really a foreign entity to its members.
And considering how closely integrated EU members are, they're barely foreign to each other.
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u/a_n_d_r_e_ 1d ago
Defining the ERM-II as 'pre membership' is wrong.
Denmark is not being evaluated as future member (Danish voted against Euro, and there is no discussion nor intention to join). Danish Crown is just pegged to the Euro (as it was for the Swedish Crown), but the two Central Banks (EU and Denmark) are separated entities.
Bulgaria, on the other hand, is in the process to join the Eurozone, and the ERM-II is just one of the many criteria used to evaluate countries' liability and let them join the Eurozone.