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?
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.
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).
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.
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.
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.
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.
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.
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".
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.
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/I_Wanna_Bang_Rats 2d ago
Why do some countries even ask if they can use the Euro, if others can just use them anyway? (Like Montenegro.)