G. Duchene, Political secession, desintegration of trade and euro-isation of countriesundergoing transition: the case of Montenegro, REV ET COMP, 31(4), 2000, pp. 57-98
The transition process has been accompanied by the emergence of numerous ne
w countries seeking full independence, the most recent case being the separ
ation between Montenegro and Serbia, as the former has adopted as its offic
ial currency the German mark, which has replaced the Yugoslav dinar, still
circulating in Serbia. How has this change occurred? and what are the macro
economic and institutional consequences of the disintegration of trade and
currency ? After dealing with these questions, classical theories about cus
toms unions and the optimum currency area are used to analyse this process.
A recent development in the theory of monetary unions may better explain t
he present euro-isation of Montenegro. Accordingly, the adoption of an inte
rnational currency by small countries strongly stimulates trade and growth.