Krgovic, Ljubisa --- "Euroization in Montenegro: benefits, weaknesses and economic implications" [2005] ELECD 386; in Liebscher, Klaus; Christl, Josef; Mooslechner, Peter; Ritzberger-Grünwald, Doris (eds), "European Economic Integration and South-East Europe" (Edward Elgar Publishing, 2005)

Book Title: European Economic Integration and South-East Europe

Editor(s): Liebscher, Klaus; Christl, Josef; Mooslechner, Peter; Ritzberger-Grünwald, Doris

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781845425173

Section: Chapter 11

Section Title: Euroization in Montenegro: benefits, weaknesses and economic implications

Author(s): Krgovic, Ljubisa

Number of pages: 21

Extract:

11. Euroization in Montenegro:
benefits, weaknesses and economic
implications
Ljubisa Krgovic
´

1. INTRODUCTION

The last decade was characterized by an accelerated development of mon-
etary theories, as well as the implementation of new ideas and financial
innovations. These developments have confirmed yet again that there is no
generally accepted monetary theory, that is, no common pattern of mon-
etary policy to be followed by central banks.
Although this decade was also characterized by a more intensified imple-
mentation of inflation targeting, we can still conclude that, in practice,
central banks are dominantly focused on exchange rates. This hypothesis
has been confirmed by research conducted by Fry (2000) on a sample of
94 countries. Figure 11.1 shows the most important results of this research.
The figure clearly shows that of the 94 central banks analysed, for 33 the
exchange rate represents the main objective, and for 34 an important objec-
tive. In other words, 67 central banks recognize the exchange rate as an
important objective, while inflation represents an important objective for
61 central banks.
There are a great number of different currency regimes in the world
today. The following 11 regimes have been distinguished both in theory and
practice:

1. Currency union
2. Currency board
3. Fixed peg to one currency
4. Fixed peg to a group of currencies
5. Horizontal band
6. Crawling peg
7. Crawling band
8. Tightly managed float

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156 Monetary and exchange rate policies

9. Other managed float
10. Free floating
11. Dollarization

Various ...