Irregular Webcomic! #4578

The currency of Romania is the leu (plural: lei).

Romania intended converting to using the euro in 2019, but by 2018 it had failed to meet some of the target economic criteria for monetary union and the target date was reset to 2024. But in 2021 the target was again shifted further into the future, to some time in 2027/28.

Interestingly, while checking these facts, I discovered that Montenegro and Kosovo are both using the euro as their national currency - without officially adopting it, at least according to the European Union. This is a status known as unilateral adoption. Montenegro's case in particular is fascinating.

Countries adopting other nation's currencies is not especially unusual. Ecuador and El Salvador, for example, have used US dollars as their official currency since 2000 and 2001 respectively. They don't print US dollars, for obvious reasons, but they import US coins and banknotes and circulate them within the country as the officially recognised medium of exchange, and keep track of citizens' bank accounts in US dollars.

I tried to find out what the US Government's stance on this use of their currency by other countries is, but I couldn't find anything explicit. I suspect it might be a "no comment" policy, or "we have no policy on this". Whatever the US Government's opinion, they have no legal jurisdiction in Ecuador or El Salvador, so they can't effectively stop those countries fro using the currency. So, essentially, foreign nations can unilaterally adopt the US dollar as their currency, and there's nothing the US can do about it (short of starting a war). I suppose the US could attempt to choke off supply of physical coins and banknotes to those countries, but it feels like any such attempts would be futile.

But the European Union is a different beast. They do have strict rules about who can and cannot use the euro as a currency. And they have the ability to enforce those rules on EU member nations and, critically, on nations who wish to become EU members. Montenegro wants to become a member of the EU, and is currently in the process of jumping through all the necessary procedural hoops. However...

During the prolonged breakup of Yugoslavia, following the collapse of the Soviet Union in the 1990s, the state of Montenegro decided it needed monetary independence from the rest of Yugoslavia. In 1999 Montenegro adopted the Deutsche Mark alongside the Yugoslav dinar as a dual currency system. By January 2001 enough Deutsche Marks were in circulation in Montenegro that the government abandoned the dinar and switched to using the mark as its sole currency. So far, so good.

On 1 January 2002, Germany, along with the initial 11 other eurozone nations, switched from their traditional currencies to euro. By default, Montenegro went along for the ride. Deutsche Marks began disappearing from circulation, replaced by euro notes and coins. When Montenegro became an independent nation in 2006, it simply continued using the euro as its currency, rather than minting its own new currency.

Now, however, this puts Montenegro in a tricky position with regards to its application to enter the European Union. The EU has a strict rule that only EU members are allowed to use the euro as a currency.^[1] So Montenegro is in violation of EU law, and being in a state of violation of EU law, it cannot be admitted to the EU. Negotiations on this point are ongoing. Technically, the only way for Montenegro to qualify to join the EU would be for it to stop using the euro as its currency, and to issue its own independent currency, and then once it's accepted into the EU it could convert back to the euro. Montenegro obviously doesn't want to go to all of the bother and expense of doing this and, to their credit, EU negotiators also recognise the sheer stupidity of going through such a ridiculous process, and are currently attempting to come to some more sensible agreement that takes into account the historical contingencies that led to this state of affairs in the first place.

Here's hoping that common sense sees this through and the various legal heads can offer Montenegro a sensible path forward.

[1] EDIT: A reader has pointed out this is not quite true. The EU has bilateral agreements with the four non-EU microstates of Andorra, Monaco, San Marino, and the Vatican City that they can use the euro, and even mint their own euro coins. Again, this comes about because of historical contingency, since Andorra and Monaco used French francs immediately prior to the introduction of the euro, the Vatican used Italian lira, and San Marino used the Sammarinese lira, which was essentially just the Italian lira and usable interchangeably across both San Marino and Italy.