Why is the EU not happy with the euro usage in Montenegro

Question

According to Wikipedia, the ECB and the European Commission are unhappy about the usage of the Euro as the national currency of Montenegro.

The European Commission and the ECB have since voiced their discontent over Montenegro's unilateral use of the euro on several occasions

I do not understand why they should concerned about that. As far as I understand, widespread acceptance is good for a currency, even more if foreign governments demonstrate trust in the currency by using it as their national currency (Granted, Montenegro isn't really an economic giant). Since the government of Montenegro cannot print its own euros an negative influence can be ruled out.

So, what is the mistake in my assumptions?

Answer 1

It sounds strange, indeed.

There is a Deutsche Welle article Montenegro's peculiar path to EU membership from 2013 which has one reasonable argument:

Still, for becoming a member of the eurozone, there is one more criteria [sic!], emphasizes ECB press officer Krzyzanowski:

"The country must achieve a stable exchange rate, which means the currency of the country has to be stable against the euro for a certain period of time."

A country without currency can hardly demonstrate its capability to keep the exchange rate stable. On the other hand, there is hardly a better proof that a Euro adoption is feasible than having it already adopted - even if it's only de facto without the blessing of ECB and Euro member states.

Answer 2

Not really a mistake in your assumptions but in the context of the situation. It's no longer about currency substitution (eurodization in this case) , it's about a soon to be EU member that did not follow the criteria the EU deems important for price and growth stability (and further accession to eurozone).

That is - the EU is concerned about any deviations to the treaties. Notably the convergence criteria (or Maastricht criteria), particularly after the euro-debt crisis. So unlike normal currency substitution (dollarization for example) which has a strictly economy side, Montenegro eurodization has a political side.

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This issue is not new. It started at about the same time as the talks for accession of Montenegro to the EU. You see, for a country to be inside the eurozone (which is different from adopting the euro), it needs to follow the convergence criteria, notably:

Agreed in Maastricht by the EU Member States in 1991 as part of the preparations for introduction of the euro, the convergence criteria are formally defined as a set of macroeconomic indicators which measure:

• Price stability, to show inflation is controlled;
• Soundness and sustainability of public finances, through limits on government borrowing and national debt to avoid excessive deficit;
• Exchange-rate stability, through participation in the Exchange Rate Mechanism (ERM II) for at least two years without strong deviations from the ERM II central rate;
• Long-term interest rates, to assess the durability of the convergence achieved by fulfilling the other criteria

The exchange-rate stability criterion is chosen to demonstrate that a Member State can manage its economy without recourse to excessive currency fluctuations, which mimics the conditions when the Member State joins the euro area and its control of monetary policy passes to the European Central Bank (ECB). It also provides an indication of the appropriate conversion rate that should be applied when the Member State qualifies and its currency is irrevocably fixed.

Since Montenegro is already using the euro you have a new precedent. I think it's very unlikely that the EU would require Montenegro to stop using the euro just to follow the treaty rules (it's more likely that Montenegro central bank would remain a kind of silent observer for a couple of years after accession, but this is very speculative).