Focus on Central, Eastern and South-Eastern Europe
Edited by Ewald Nowotny, Peter Mooslechner and Doris Ritzberger-Grünwald
Chapter 3: Serbia: On the De-euroization Road to the Euro
Radovan Jelašić Although still outside the euro area, both private and legal entities in Serbia have already implemented the euro as a means of payment. An anecdote valid even today tells more than any study can: ‘What does a Serb do if he has no more dinars? He changes 100 euro!’ So every citizen of Serbia keeps only the bare minimum of Serbian dinars (RSD) in his pocket but always has at least EUR 100 with him in case of an emergency. One of the key questions of the Serbian macroeconomic puzzle for the last four decades has been and still is: ‘Can we allow the exchange rate to float and, if so, to which extent if we already have a high level of euroization?’ Serbia, being the only country with a floating exchange rate in ex-Yugoslavia, faces an additional challenge, namely every time the floating gets more intensive, our currency regime is immediately proclaimed a failure compared to the ‘stability’ of the other ex-Yugoslav countries. Therefore, it was not a surprise that at the beginning of the economic crisis (with the fall of Lehman Brothers in September 2008) resulting in RSD depreciation of some 23 per cent, the discussions only intensified regarding the exchange rate mechanism. Unfortunately, however, those discussions did not go in the direction that the National Bank of Serbia (NBS) would have liked – how to lower the dependence of the economy on the EUR exchange rate development; rather it focused on how to...
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