Research on the Impact of the Change of the Reference Currency (From USD to EUR) on the Economy of the Republic of Moldova

Abstract

The European Council, on 23 June 2022, granted the Republic of Moldova candidate status for membership in the EU, which was a major step towards aligning its economic and financial systems with EU standards. One of the key changes to this process is switching the official exchange rate base currency of the Moldovan leu (MDL) from the US dollar (USD) to the euro (EUR) on January 2, 2025. The technical change, implemented by the National Bank of Moldova (NBM), does not affect monetary policy or come near to money supply but will illustrate the increasing function of the euro in Moldovan trade, finance transactions, and European market integration. With over 60% of trade and 70% of remittances denominated in euros, this realignment enhances exchange rate stability between EUR/MDL, reducing currency risks and promoting economic predictability. The paper analyzes the effect of this change with the experience of Romania during 2003-2005 and highlights its role in enhancing EU integration and economic resilience. CZU: 336.748.7(478); JEL: E58, F31, F33