Issuing Policies in Currencies Denominated in Euros and Eurocents

Abstract

Globalization and strengthening of integration processes have, among other things, also influenced some solutions relating to monetary sovereignty of particular countries. A great number of transition countries as well as some other underdeveloped countries are facing both inefficiency in their real sectors and problems in their financial sectors. This primarily refers to the instability of the exchange rate of their national currencies, frequent and high devaluations, mistrust of the users in domestic currency, inflation, and the like. Under such circumstances, some countries decide to give up their monetary sovereignty. Prior to such a decision, it is certainly essential to find answers to the following four key questions: a) what does the country win and what does it lose, b) what are the expenses of such activity and for whom is such change acceptable, and c) which form of abandoning monetary sovereignty should be chosen? Problems can also be significant regarding the possibility that the phases of economic development do not match. Hence, the measures of monetary policy adjusted to the economic cycles of the country whose currency has been chosen as reserve currency need not correspond with the phase of development of the economy in the country using that currency. In the case of Euro as the legal means of payment, the production of Euro coins will begin two year before they are officially put into circulation. In that period (of two years), each year the appropriate quantity of coins will be produced, with a value structure allowing normal functioning of the monetary market in the moment when Euros are put into circulation, which is very important in currency conversion. With respect to the long Croatian monetary history, but also to the recent issuing activity in the segment of circulation coinage, commemorative circulation coinage and numismatic coinage, all these activities should continue in the future as well. Commemorative coins are, as a rule, identical to regular circulation coins in all details, including the material of which they are made, with differences only in some details (indicating the occasion on which the coins are issued) or in their value in comparison to circulation coinge. At the moment, such coins are accepted as exclusive legal means of payment but only in the country that has issued them. Correspondingly, the amount of this money is determined by the ECB in keeping with its issuing policy. this money is a part of the monetary mass of the issuing country. Issuing policy of the EU member countries that have accepted the common currency and those countries that are not EU members but have their legal currency denominated in Euros regardless of the sort of coinage indicate: - the possibility to diversify the offer of all sorts of coinage following the said criteria, or introducing new criteria for their differentiation or their combinations, - currency denominated in Euros and Euro cents in each issuing country becomes, in a large part, the object of interest and collecting in other countries with the currency of the same name (and with one common/same side of the coins - reverse) because these are the coins with at least one common characteristic. - The selection of motifg at the national side of the coins (head) can itself be the reason for choosing this currency as the object of collecting, or it can become an additional reason for collecting in combination with the above section. - Collecting of these coins will in the future certainly be a part of a much wider process, so that later it will be very difficult if not impossible to secure certain coins at the quality level of coinage that have not been in circulation. Despite the short issuing activity relating to the currency denominated in Euros and Euro cents, the trends in this field so far strongly suggest some regularity, such as: - There is strong interest for circulation coins of Euros and Euro cents as objects of collecting even among peiople whose motivation is not primarily numismatic. Even the most optimistic expectations regarding the new common currency have been absolutely surpassed (not only in the countries that have introduced Euro as their currency, but much wider). - As soon as Euros and Euro cents have appeared in circulation, a part of these coins were hoarded and became objects of trade at the numismatic market reaching very high prices. The object of collection has namely become much wider because in addition to national reasons for collecting, there are now other motives as well, since the Euro and euro cent coins have one side (reverse) in common. - Speculative reasons for treasuring up these coins result from the above mentioned grounds but also from the fact that the beginning of circulation of hese coins provides the opportunity to right at the start socure a cer5tain quantity of the coins satisfying strict numismatic standards regarding the state of these coins (preferred quality is that of non-circulated coins). - Issuing commemorative circulation coins and numismatic coins additionally point at great interest for these monetary forms significantly broadening the field of numismatic interest. Croatia should therefore quickly design its own issuing policy in the segments of circulation and commemorative circulation coins, and especially in the segment of commemorative circulation coins and commemorative coins.

Keywords: monetary sovereignty, monetary policy, eurization

JEL Classification: E4, E5