Croatia on its way to adopting euro

In July 2020 Croatia joined the exchange rate mechanism (ERM II) prior to membership of the euro area. According to the Polish Institute of International Affairs, the Croatian government, like the opposition and the majority of the public, sees more benefits than threats in the common currency and points to the possibility of its introduction in 2023. However, despite the lack of political obstacles, it is likely to happen later due to Croatia's economic problems, mainly excessive debt which are exacerbated by the recession caused by the Covid-19 pandemic.

Adopting the euro, in addition to joining the Schengen area, is a priority of the Croatian government's European policy since its accession to the EU in 2013. In May 2018, the cabinet of Andrej Plenkovic from the conservative Croatian Democratic Community adopted a strategy for introducing the euro. Victory of this party in the parliamentary elections in July this year and the appointment of a second Plenkovic government determines the continuation of these activities.

The Croatian government points out that applying for membership of the euro area is an economic, not a political, decision. Among the advantages, he sees the stabilization of public finances and the banking system, which in turn is expected to boost foreign investment. It also emphasizes lower transaction costs thanks to the elimination of currency conversion. This is important because the euro is widely used in Croatia, in this currency, for example, numerous loans and savings are made, and tourism, the most important branch of services, also uses it.

Aall the necessary details about the Schengen Area here.

(WBJ)