Macedonia adopts US$ currency

[Risto the Great]

Well .... not this week.
Nor is the Rouble on the cards.
But isn't this an interesting thought. A complete snub to the UN, EU and anyone else.
What could we get out of the USA or Russia for such an affirmation of their economic significance?

I suspect we would get into the EU faster than Serbia got bombed if we stop toeing the line.

[Venom]

I'd imagine France would be throwing franc... sorry Euros our way very soon after it happened.

[Rogi]

Very interesting idea and political move. I haven't yet considered what all the pros and cons would be of such a move - perhaps we can try and list them?

I wouldn't mind if we got rid of the existing currency in Macedonia. I mean, it's named after the Denarius, the Roman currency system, which was imposed on Macedonia by the occupying Romans so I don't really give it any special meaning for our nation.

[Coolski]

Isn't a change in currency a big decision, and one which involves complete trust and a long-term relationship?

I'm not so sure if it'd be a good idea. Yes, we would be sticking it to the EU, but i'm sure there are many ways of sticking it to the EU.

[Orovnichanec]

I say we adopt the Pound

[Pelister]

I say we adopt the Pound

I'm with that.

I think the Pound is the way to go.

[Coolski]

I am not too familiar with the concept of adopting currencies. What is the purpose?

[Risto the Great]

Quite frankly ... nothing much other than providing a pegged exchange rate. The Euro is already the dominant currency in Macedonia. The silly suggestion of mine is just a reminder that nothing should be assumed in relation to the direction of Macedonia and that if suitors provide an adequate incentive, then new opportunities may present themselves.

[Coolski]

Sorry to go into the details Risto. I understand what you were getting at with regards to showing the EU that perhaps they are no longer Macedonia's perferred path, but i'm interested in the specifics of this currency thing.

With the exchange rates though, I thought having a pegged exchange rate occurred only when a country was too unstable to regulate its own currency. I understand that Macedonia stopped pegging the denar to the USD a few years ago.

With regards to the eurocurrency, it is unofficially used when buying houses/cars etc. in MKD at the moment. It used to be Deutsch Marks.

What do these powers gain when smaller countries use their currencies unofficially? Eg. if Macedonians buy cars etc. with USD, what will that mean to the US and what will the EU loose?

[Pelister]

I'll have a stab at it, even though I know very little or nothing about this stuff. Year ten economics.

It means that the official currency of Macedonian banks is in U.S dollars. Now this is great news for the U.S, as it keeps the U.S dollar in demand, and strong in relation to other currencies, i.e, it has more buying power.

Now for a small country like Macedonia to do this, the gesture is really more symbolic than anything else - as RTG pointed out about favouring the person scratching your back...etc.

Now if a huge oil producing country for instance, or a big economy, such as Russia, or even Iraq, decided to "dump" U.S dollars for the Euro, it would have a weakening effect on the U.S dollar, would drive up the cost of imports, and lead to a worsening deficit - which the U.S already has.

[Coolski]

aha.. so that is why the Russians were thinking about dealing in oil in Rubles.

[Risto the Great]

Honestly, Macedonia should get its lingerie on and play with the idea of becoming a Russian economic satellite. The boyfriends (USA, EU) will go crazy.

[Pelister]

aha.. so that is why the Russians were thinking about dealing in oil in Rubles.

Absolutely.

One reason, given for the invasion of Iraq, was that Saddam threatened to dump the U.S dollar, in favour of the Euro !

Because so many billions of dollars are passed, through the purchase and sale of oil, in U.S dollars, a change to Euro's would have had a very huge impact on the U.S dollar, and economy - some argued it would send it into a recession.

It would have wiped 10 to 15 cents off the buying power of the U.S dollar, in relation to all other currencies ... etc.

[Pelister]

Honestly, Macedonia should get its lingerie on and play with the idea of becoming a Russian economic satellite. The boyfriends (USA, EU) will go crazy.

That is not such a bad idea actually.

You may be joking here, by I think there is enormous merit in that idea.