The European Union is currently addressing a complex issue regarding Montenegro’s use of the euro as it navigates the final stages of its accession process. Montenegro has utilized the euro unilaterally since 2002, a situation that has become increasingly problematic as the country seeks formal EU membership. This unilateral euroisation, which lacks any formal agreement with the European Central Bank or EU frameworks, poses significant legal challenges at this advanced stage of negotiations.
As Montenegro’s finance minister, Novica Vuković, noted, the European Commission is working towards a “pragmatic solution,” with a formal proposal anticipated by the end of May. The situation is not merely political; it raises institutional questions about how to accommodate a candidate country that has operated with the euro for decades without being part of the eurozone, creating a legal gap in the accession framework.
Montenegro’s financial system heavily relies on the euro, which contributes to banking stability and external credibility. The absence of an independent currency means that the central bank operates under eurozone monetary conditions, making a reversal of euroisation unfeasible. Consequently, Brussels must consider limited options to address this anomaly.
One potential solution involves establishing a formalised recognition mechanism that would legitimise Montenegro’s use of the euro within the accession treaty framework, thereby avoiding any disruptive transition. Another avenue under consideration includes transitional arrangements linked to fiscal discipline and alignment with eurozone governance rules.
Timing is crucial as Montenegro stands as the most advanced EU candidate, having provisionally closed 14 negotiating chapters with an accession target around 2028. The EU is in the process of drafting the accession treaty, marking a shift from negotiation to implementation. Any unresolved issues related to monetary policy could jeopardize these final stages of accession.
The implications of Montenegro’s euro usage extend beyond legalities; it significantly impacts economic stability by reducing currency risk and lowering borrowing costs while enhancing investor confidence. However, this arrangement also limits traditional macroeconomic tools such as exchange rate adjustments and independent monetary policy, increasing pressure on fiscal discipline and external balance management.
For the EU, balancing legal consistency with geopolitical momentum presents a challenge. The urgency of enlargement policy has intensified, with Montenegro serving as a critical case study for expediting accession processes in the Western Balkans. The euro issue embodies a technical challenge that intersects treaty law, financial stability, and enlargement credibility.
This negotiation centers not on whether Montenegro will continue using the euro—it already does—but on how to formally integrate this reality into the EU framework without setting a precedent that might complicate future enlargements.
