Historical Sketch
The victory in World War I rendered Serbia the leading power in the west Balkans which absorbed neighboring Montenegro and Slavic lands of the defunct Habsburg Empire to form the Kingdom of Serbs, Croats and Slovenes, renamed Yugoslavia in 1929. In 1941, Yugoslavia got occupied by Germany and Italy, which dissolved the state. Three semi-independent monarchies, Serbia, Croatia, and Montenegro were carved out and put under suzerainty of the occupation powers. During the War of Liberation, rival provisional governments were formed by the partisans (Democratic Federal Yugoslavia) and the Yugoslav royal family in exile. In 1945, Yugoslavia was restored under the leadership of the victorious communist partisans, and the monarchy was abolished. Yugoslavia remained in the socialist block until the 1990s, however with some distance to the communist center. In the 1980s, after the death of the long-term ruler, political dissent began spreading and led to Yugoslavia's disintegration in the early 1990s. In 1991, the republics of Slovenia, Croatia, and Macedonia seceded, the simultaneous secession of Bosnia-Herzegovina led to a bloody civil war until 1994. The two remaining states of Serbia and Montenegro continued to uphold the illusion of a Yugoslav unitary state until 2003, when it was formally transformed into a state union of Serbia-Montenegro. In 2006, after a referendum, Montenegro left the state union, so that the last trace of Yugoslavia disappeared.
Monetary History Overview
The Kingdom of Serbs, Croats and Slovenes, later Yugoslavia, took over the Serbian currency, and the Serbian National Bank took over the central bank role for the new state in February 1920. The
1st Yugoslav Dinar
was therefore a continuation of the former Serbian currency. The withdrawal of the former currencies in the different constituent territories lasted until mid-1921. The treaty of Saint-Germain after the First World War prescribed the liquidation of the Austro-Hungarian Bank and the nationalization (counter-stamping) of the circulating Austro-Hungarian banknotes. In Croatia, Bosnia and Slovenia, they were overprinted until February 1920 and continued to circulate until May 1921. The 1920 currency law made the Dinar into a gold currency. This could, however, not be implemented and was abandoned in December 1922. The Dinar continued to depreciate as the post-war economic crisis persisted throughout the 1920s. In May 1931, the Dinar was nominally pegged to gold again, which again could not be implemented and was abandoned a couple of months later and replaced by a Dollar peg in early 1933. The dismanteling of Yugoslavia during World War II also put an end to its currency.
Yugoslavia's restoration at the end of the Second World War saw a country with a patchwork of currencies. The interim states of Serbia and Croatia had introduced their own currencies, and half a dozen occupation currencies were circulating in the rest of the countries. In April 1945, the
2nd Yugoslav Dinar
was created as national currency, and monetary integrity was restored within weeks, except for the coastal territories along the Adriatic where the Italian Lira remained current until end 1946. The Dinar got pegged to the US Dollar. As Yugoslavia did not introduce the communist economy, the currency remained to some extent convertible. In consequence, the exchange rate did not get frozen, but was adjusted several times to the effective value. In 1952, the Dinar was cut by almost 85% and in 1962 by another 60%. A third devaluation by 40% was followed by a currency reform. Beginning of 1966, two zeros were cut, and the
3rd Yugoslav Dinar
became the new unit. Currency stability could be preserved until 1980, also after the exchange rate had been floated in 1973. The political instability of the 1980s triggered Yugoslavia's economic decline, and Dinar began depreciating at annual rates of 30% and more. Beginning of 1990, a currency reform was carried out. Four zero were slashed, and the
4th Yugoslav (Convertible) Dinar
became the new unit. It was pegged to the German Mark, which could not be maintained for long time as the civil war broke out in the same year. The Dinar got devalued by 95% within 18 months, and in July 1992, another currency reform followed. One zero only was cut, and the
5th Yugoslav Dinar
was mainly meant to invalidate the banknotes still held in the republics that had seceded before. Currency instability prevailed, and the exchange rate was devalued at ever shorter intervals and got floated in April 1993. This initiated a hyperinflationary surge that costed 17 digits within less than a year. The National Bank tried to keep track by conducting repeated currency reforms. In November 1993, six zeros were cut, creating the
6th Yugoslav Dinar
which survived just three months. In January 1994, another nine zeros were slashed, creating the
7th Yugoslav Dinar
for only 23 days, during which another seven zeros vanished. In January 1994 finally, hyperinflation could be defeated. The
8th Yugoslav (New) Dinar
was firmly pegged to the German Mark, and the state overspending could be stopped. The exchange rate was devalued by 70% in November 1995 and was adjusted periodically afterwards. In January 2001, the peg was abolished, and the Dinar remained stable until 2003.
Yugoslavia joined the International Monetary Fund (IMF) on
27.12.1945 as a founding member. On
14.12.1992
Serbia nominally took over the Yugoslav membership.