Montenegro will keep the euro as its sole legal tender after joining the European Union, but accession will not automatically make it a member of the eurozone, the European Commission said. The distinction means the country can enter the EU without abandoning the currency it already uses, while full participation in the eurozone will require a separate assessment against economic convergence criteria.
Under the terms set out for accession, Montenegro would join the EU with an exemption under Article 139 of the Treaty on the Functioning of the European Union. Its accession treaty would allow it to continue using the euro as its only legal tender under national legislation, rather than making the currency legal tender through EU law.
The Commission said Montenegro’s unilateral use of the euro does not confer the rights or obligations that come with official eurozone membership. Use of the common currency is legally distinct from full participation in the eurozone’s institutional system, so EU entry alone would not change Montenegro’s status within that system.
Adapted convergence assessment
To join the eurozone formally, Montenegro would have to demonstrate a high degree of sustainable convergence under Article 140 of the treaty. The country has formally accepted a tailored framework for assessing its economic convergence, which was prepared during accession negotiations and is already agreed rather than a proposal for talks at a later stage.
The adapted framework is economically equivalent to the system used to assess other countries seeking to join the eurozone, according to the Commission. EU member states and the European Central Bank were consulted and supported it. A draft article for the accession treaty and a protocol setting out the adapted assessment framework are included in the EU’s common position for negotiating Chapter 17, on economic and monetary policy.
The adjustment reflects Montenegro’s lack of a national currency. Countries seeking eurozone entry usually have to spend at least two years in the European exchange-rate mechanism, ERM II, without serious disruption to the stability of their national currency. Montenegro has no national exchange rate to monitor against that criterion, so the framework will instead use a broader review of economic and financial indicators.
The review will focus on the balance of payments, the country’s external financial position, price movements and cost competitiveness. Those indicators will be examined to determine whether imbalances exist that could threaten economic stability. The long-term interest-rate criterion will also need an adapted assessment, because under unilateral euroisation it does not reflect exactly the same market risks as it does in countries with their own currencies.
Montenegro temporarily closed Chapter 17 at an Intergovernmental Conference in Luxembourg on 12 October. The EU’s common position for the chapter, which contains the proposed treaty provisions and protocol for the convergence assessment, is publicly available. Montenegro will not have to give up the euro to join the EU, but its route to full eurozone membership remains conditional on demonstrating sustainable economic stability and meeting the requirements of EU law.
