- The Washington Times - Monday, January 8, 2007

Ministates make currency switch

BRUSSELS — Slovenia converted to the euro on Jan. 1, officially becoming the 13th member of the eurozone, and the first of the European Union’s newest members to qualify to use the currency.

But at least a half-dozen other European ministates and territories use the currency as legal tender, without approval from the European Central Bank (ECB).

The euro was introduced five years ago to provide economic cohesion among EU nations. But euros also are in circulation in dozens of countries and overseas territories from the North Atlantic to the Pacific.

In Europe, Montenegro, Vatican City and San Marino and the principalities of Andorra and Monaco have used the euro since its inception. In Kosovo — technically still part of Serbia but administered by the United Nations — the euro circulates alongside the Serbian dinar.

The ECB has not opposed unilateral euro use by microstates that historically have used the French franc, Spanish peseta or German mark as legal tender.

“The ECB does not either encourage nor deter third countries from using the euro,” ECB President Jean-Claude Trichet said recently.

Joaquin Almunia, the EU economic and monetary affairs commissioner, has encouraged nations to adopt the euro as a means of achieving economic stability.

“The adoption of the euro creates the right conditions for economic prosperity by providing low inflation and low interest rates,” he recently said.

It is not uncommon for small countries in Africa, Latin America and Asia to use the currency of a major nation — typically, the U.S. dollar.

When newly independent East Timor adopted the dollar after seceding from Indonesia in 1999, the U.S. Treasury dispatched planeloads of paper money and tons of small-denomination coins to the impoverished Pacific nation.

However, the rise of the euro has made inroads into the dollar’s international dominance. Montenegro, for example, switched to the euro after having adopted the German mark in the 1990s.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide