Experts agree that it is impossible to introduce the euro faster.
In the best case scenario, Croatia would be able to introduce the euro in five years, said Governor of the Croatian National Bank Boris Vujčić and Finance Minister Zdravko Marić in a debate on the margins of a conference in Dubrovnik. Vujčić reiterated that Croatia’s central bank was preparing a strategy for the introduction of the euro and was analysing all the effects of the transition to the euro for the local economy, reports Večernji List on 12 July 2017.
The decision has to be made by Croatia on when and how to enter the eurozone and begin negotiations with the European Union, said director general of the International Monetary Fund Christine Lagarde, who attended the conference and believes that Croatia can only profit from this process.
The decision to start negotiations and enter the ERM mechanism, which is a kind of the euro waiting room, would mean that the government was ready to embark on reforms that would significantly reduce public debt and increase employment, competitiveness and exports. Entry into the eurozone is not just a matter of the exchange rate, although the stability of the local currency against the euro is one of the conditions with which Croatia would have no problems.
Following the experience of Slovenia and other transition countries, citizens are afraid of massive price hikes, while some economists believe that the Croatian monetary authorities have more manoeuvring space with the kuna than they would have with the euro. Unlike them, Vujčić strongly advocates for the euro, because it would solve the current exchange rate issues, which create huge barriers in the conduct of monetary policy.
If Croatia fulfils all the conditions for the introduction of the euro, this would mean that it had created a well-regulated economy, which would automatically lead to a fall in interest rates. However, director of the Croatian Banking Union Zdenko Adrović has recently warned that, with the introduction of the euro, the fixing of loans in the kuna could become inconvenient. Still, the citizens do not have to worry about it during the next five years, and most loans in the kuna have fixed interest rates for a period of five to seven years.
“All countries with less than 10 million inhabitants have either quickly introduced the euro, or their currency is closely following the euro. Larger countries are leading a more liberal exchange rate policy that favours exporters in recessions, but there is no consensus about the results of such policies. Both opponents and proponents of the introduction of the euro believe that their solution would be good for economic growth,” said economic analyst Velimir Šonje, who supports the introduction of the euro.
Minister of Economy, Entrepreneurship and Crafts Martina Dalić believes that Croatia will need between five and seven years for the euro to be introduced.
