The Introduction of the Euro as a Solution to the Problem of a Dual-Currency System in Serbia – A Qualitative and Quantitative Analysis

The paper analyzes the current monetary conditions in the Republic of Serbia, with a particular focus on the level of euroization of the financial system and its implications for the effectiveness of monetary policy. In the context of European integration and Serbia's strong trade ties with the European Union, the paper explores the potential benefits and costs of introducing the euro as the official currency in the Republic of Serbia. Special attention is given to the analysis of the macroeconomic environment, the degree of nominal and real convergence, as well as the structural challenges that Serbia faces. Observing the macroeconomic surroundings, it is evident that Serbia lags behind both the Eurozone member states and the EU countries that have not yet adopted the euro. At the same time, significant progress has been made in the movement of key macroeconomic variables in recent years. Although the introduction of the euro could contribute to financial stability and accelerate integration, it requires comprehensive reforms and further alignment of the Serbian economy with European Union standards.