MONETARY POLICY IN TERMS OF EUROISATION Euroization or dollarization is a process which involves greater or full representation of foreign currency over domestic. The use of foreign currencies in some countries is usually called dollarization, but when it comes to European countries, the more appropriate name is euroization. Dollarization arises as a result of financial instability in the country and the loss of the credibility of population in their own currency. There are three basic types of dollarization: official, semi-official and unofficial. Every type of dollarization comes with some advantages and disadvantages. The offical dollarization means to the country the loss of its monetary sovereignty and the ability to conduct its own monetary policy, while in return, the country gets stability that is reflecting in inflation and interest rates that are aligned with the country whose currency has been taken over. The examples of Montenegro and Ecuador show the direct effects of official dollarization on the economic performances of these countries, which in the end gave a positive impression in the short term. In a situation when the costs of unofficial dollarization exceed the benefits, economic policy holders should think about measures of de-dollarization or de-euroization. In the Republic of Croatia there is a high level of unofficial euroization followed by low interest rates on saving and time deposits. The dollarization strategy is suitable for smaller countries where hyperinflation or uncontrolled inflation is present, but it is unrealistic to expect that dollarization will lead to accelerated economic growth.