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Efforts to de-euroize the Albanian economy do not enjoy widespread support among the Albanian public, according to a survey conducted by "Monitor" on its website and social media networks. Only 28.6% of voters expressed support for measures that would impose the use of the Albanian Lek in domestic economic transactions, discontinuing the use of the Euro. Interestingly, the majority of voters would be in favor of adopting the Euro as the country's national currency, with 37.85% of voters expressing support for this alternative, Monitor reports.
Meanwhile, 33.5% of voters in the survey have voiced support for maintaining the current state, continuing the free use of both the Lek and the Euro in the Albanian economy. Based on the survey results, it can be said that the majority of voters, 71.35% of them, do not support measures that would prohibit the use of the Euro.
The Albanian economy is estimated to have a relatively high level of euroization, although it is challenging to quantify precisely due to the difficulty of measuring the amount of Euros circulating outside the banking sector. As of the end of September 2023, the share of foreign currency bank deposits against broad money (monetary aggregate M3) was 44%. Based on this, it can be said that at least 44% of the money in the Albanian economy is in foreign currency, primarily in Euros.
However, it should be noted that the weight of foreign currency deposits against M3 in recent years has been negatively affected by the exchange rate effect. Just last year, the Euro-Lek exchange rate depreciated by more than 9%.
The high trust of the public in the European currency has led to the Euro being used as a parallel currency in the Albanian economy. Prices of non-perishable assets and the majority of long-term assets are quoted in Euros.
However, the high euroization of the Albanian economy poses several problems, exposing a significant portion of Albanians to exchange rate fluctuations, reducing the effectiveness of monetary policy and complicating the targeting of price stability.
In 2017, the Bank of Albania signed a memorandum with the Ministry of Finance and the Financial Supervisory Authority, aiming to expand the use of the national currency in the financial system and the Albanian economy.
This was the first concrete attempt to take measures to reduce euroization in the economy. However, until now, only the Bank of Albania has undertaken concrete regulatory measures to increase the use of the domestic currency in the banking sector. These measures aim to increase the costs of financial intermediation in foreign currency while simultaneously reducing them for the Lek.
From the current analyses, the results of the de-euroization strategy have been modest. The Bank of Albania observes that structural changes in the economy in recent years, particularly the significant growth in tourism and inflationary developments, have been accompanied by changes in economic and monetary policies, as well as the behavior of real economic agents.
For these reasons, it has become challenging to distinguish the effects closely related to de-euroization measures.