March 18, 2023 - Inflation in the Eurozone weakened slightly in February, the European Statistical Office confirmed on Friday, and price increases saw a slight slowdown in the European Union as well. The Croatia inflation rate for February, though, still placed the country among the Eurozone countries with a double-digit rate.

As Index writes, Eurostat confirmed the estimate of 8.5 percent growth in consumer prices in the eurozone in February, expressed by the harmonized index of consumer prices (HICP). In January, they increased by 8.6 percent.

Rising food and energy prices have been the main drivers of price growth

At the monthly level, consumer prices increased by 0.8 percent compared to January, when there was a decrease of 0.2 percent, Eurostat confirmed.

The main driver of price growth was the increase in food and energy prices. At the EU level, the harmonized index of consumer prices showed their growth in February of 9.9 percent compared to the same month last year, after a 10 percent increase in January.

On a monthly basis, prices rose by 0.8 percent in February, after a 0.2 percent increase in the first month of this year.

Croatia in the group of Eurozone countries with a double-digit inflation rate in February

Among EU countries that are not members of the eurozone, prices in Hungary increased by far the most on an annual basis, by 25.8 percent compared to last year's February. In Poland, the largest economy in that group, the prices increased by 17.2 percent according to preliminary data.

Among the eurozone members, the highest inflation rates were recorded by the Baltic countries, so in Latvia it was 20.1 percent, and in Estonia and Lithuania 17.8 and 17.2 percent, respectively.

Croatia is also in the group of eurozone countries with a double-digit inflation rate in February, at 11.7 percent, as indicated by the harmonized consumer price index.

For more, make sure to check out our dedicated News section.

January 1, 2023 - Croatia officially became the 20^th member of the eurozone, a monetary union member of the European Union (EU), making the Croatian currency and the only legal tender the euro, the second most important world currency.

As Index writes, on the first day of the New Year, Croatia became the 20^th member of the euro area, and the euro became the official Croatian currency and legal tender in Croatia. The previous eurozone expansion took place in 2015 when Lithuania became a member.

Minister of Finance Marko Primorac and CNB Governor Boris Vujčić met in front of CNB. Minister Marko Primorac commented on the introduction of the euro.

"Croatia has joined the circle of the most developed countries in the world. This was by no means an easy process. It took a long time; a number of people made significant efforts," he said. "The euro will provide us with some security in these turbulent times," he said and added that the euro will enable further growth and development.

"Over 95 percent of ATMs are stocked with euros; now the transition process is underway. So we can relax and enjoy ourselves," said Primorac.

"Kuna is going down in history; it served us well."

Then Boris Vujčić took the floor.

"I am thrilled because this year we finished the project that we started five years ago. We created the Eurostrategy then, and I must say that it did not always look like we would be in the Eurozone on January 1, 2023. This is a record timeline; it could not have been faster," he said.

"Croatia is the 20^th country that uses the second most important currency in the world," said Vujčić and listed the advantages of the euro. "It is not a magic wand that will solve many of our problems, but it will help us be a richer country," Vujčić said.

"Kuna is going down in history," Vujčić said. "The kuna served us very well. It was stable since we introduced the kuna, we had low inflation, it will go down in history with pride, we will only remember it for the good," he said.

After that, at a nearby ATM, Minister Primorac withdrew the first euros from the ATM.

For more, make sure to check out our dedicated Lifestyle section.

December 20, 2022 - Euro Croatia: from the 1st of January 2023, the official currency in Croatia will be the euro. From January 1 to 14, 2023, there will be a dual circulation period, where kuna and euros can be used for cash payments.

As SiB / Net.hr write, on January 1, Croatia will enter the eurozone, and the euro will become the official currency. Although preparations for the euro are already in full swing, Croatian citizens will be able to pay with kuna even after the New Year. From January 1 to January 14, 2023, there will be a dual circulation period, where kuna and euros can be used for cash payments.

In the dual circulation period, citizens still have to pay attention to certain things. For example, a merchant or payee is not obliged to accept more than 50 kuna coins in one transaction. The payee is obliged to apply the regulations on preventing money laundering and terrorist financing, which refer to the limit of the amount that can be paid in cash.

The change will be returned in euros, but it is possible to do so in kuna. The Law on the Introduction of the Euro provides that as an exemption from the application of the dual circulation rule if the business entity is not objectively able to return the rest of the amount in euro cash. In that case, they can return the remaining amount in kuna or kuna and euros.

As stated on the euro.hr page, which contains all the information related to the changeover to the euro; the dual circulation period starts on January 1, 2023, at 00:00 and ends on January 14, 2023, at 24:00.

CNB recommends citizens use debit cards as much as possible in transactions in the first days of 2023. "Furthermore, to facilitate cash transactions in the first days after the introduction of the euro, from the beginning of December 2022, citizens will be able to obtain starting packages of euro coins, which will enable them to pay in the new currency from the first day of 2023. With the same goal, In the first months of 2023, ATMs will have to be stocked mainly with euro banknotes of smaller denominations (of 10 and 20 euros)," according to the euro.hr website.

For more, make sure to check out our dedicated News section.

November 24, 2022 - Euro in Croatia: on the first day of 2023, the euro will become the official currency in Croatia. Paying in kuna (only in cash) will be possible until January 14. Preparations for the introduction of the euro in Croatia from January 1, 2023, are proceeding without any problems and according to plan, as was pointed out this week at the session of the National Council for the introduction of the euro.

As Poslovni / N1 write, Croatian citizens are already mostly familiar with what awaits them from the first of January. One of the questions that remain, however, is what will happen to the utility bills for December, which will arrive in January.

The utility bills for the December consumption will be issued in January 2023 and will be expressed in euros, according to the Croatian Association of Bankers.

For all payment slips that the citizens receive in advance and on which the amount of payment is in kuna, and they pay them after the introduction of the euro, the bank is obliged to make payment in euro in the amount corresponding to the amount of kuna specified on the payment order. The bank will act this way until July 1, 2023, says the Croatian Association of Bankers.

It is crucial to emphasize, they remind, that from the 5^th of September until the 31^st of December 2022, the dual pricing continues. This means that the final amount of the bill will be in HRK and EUR with the fixed conversion rate specified.

There are exceptions to that:

• value shown for prepaid electronic communication services (prepaid vouchers)
• the value and amount stated on the payment order based on an invoice or other individual document, i.e. based on the displayed price
• the value shown on cards for public payphones
• the value printed on the SIM card packaging

For more, make sure to check out our dedicated Lifestyle section.

October 12, 2022 - With net financial assets of EUR 14,400 per capita, Croatia is currently in 35^th place on the list of the world's wealthiest countries, which is led by the US, according to the the13^th edition of the Allianz Global Wealth Report published on Wednesday.

Poslovni writes, as pointed out in the analysis, that last year was the third year in which global financial assets recorded double-digit growth and reached 233,000 billion euros. But 2022 marks a turning point, with the war in Ukraine halting the post-Covid-19 pandemic recovery and "turning the world upside down." Allianz wrote that inflation has taken off, there is a shortage of energy and food, and the tightened monetary policy is "suffocating" the economy and the market, adding that the wealth of households will feel the consequences.

"Global financial assets will fall by more than two percent this year, the first significant decline since the so-called great financial crisis of 2008. In reality, households will lose a tenth of their wealth. However, unlike the major financial crisis, which was followed by a relatively quick turnaround, the medium-term forecasts are quite pessimistic this time. Namely, it is expected that the average nominal growth of financial assets will amount to 4.6 percent until 2025, compared to 10.4 percent in the previous three years", says the Allianz forecast.

Allianz Chief Economist Ludovic Subran said that 2021 marked the end of an era. "The past three years have been exceptional, and for most depositors, they represented a period of prosperity. But this year and the coming years will be different. The cost of living crisis will test the concept of the social contract. Policymakers face the enormous challenge of mastering the energy crisis, implementing a green transformation, and stimulating growth while simultaneously curbing monetary policy. There is no more room for any mistakes in policies. The key to success lies in innovative and targeted measures at the national level, as well as in European unity at the supranational level", read Subran's statement, reported in the publication.

"A real danger of a debt crisis"

Allianz also expressed concern about the level of global household debt, which at the end of 2021 amounted to 52,000 billion euros, with high annual growth of 7.6 percent. At the same time, an increasing share of this debt is held by emerging economies, primarily Asia, with the exception of Japan.

"We are concerned about the sudden debt growth at the beginning of the global recession. Over the past decade, household debt in emerging markets has grown at double-digit rates, five times faster than growth in advanced economies. Still, overall debt levels appear manageable. However, given the unfavourable structural conditions faced by the aforementioned markets, there is a real danger of a debt crisis," said Patricia Pelayo Romero, co-author of the Allianz report.

The gross financial assets of Croatian households jumped by 10.9 percent last year.

The gross financial assets of Croatian households amounted to EUR 79 billion last year, with an annual jump of 10.9 percent, the highest growth in the past ten years.

"This outstanding performance was based on all three major asset classes and was driven by dynamic equity markets combined with massive savings efforts," Allianz wrote. After two strong years, they stated, total net inflows last year reached 7.2 billion euros, almost three times more than the long-term average. Nearly half of the new savings were converted into bank deposits, representing the most popular form of savings in Croatia, i.e., 49 percent of total assets. Thus, this category of assets achieved a growth of as much as 9.5 percent, despite "no" interest rates, Allianz said.

Furthermore, savings in the form of investments in shares, investment funds, and other securities recorded the highest growth rate of all asset categories, by 12.7 percent. "However, given its share in the portfolio of only 21 percent, it is clear that Croatian households still invest only a small part of their savings in capital market products, even significantly less than the average in Eastern Europe, which is 34 percent," they noted.

Among other things, insurance and pension products recorded a strong growth of 11.1 percent, whereby savers in Croatia invest 27 percent of their financial wealth in this asset category, which is almost ten percentage points more than they invested at the beginning the previous decade. On the other hand, there was a significant increase in debt last year, by four percent, much higher than the long-term average of 0.8 percent. In the same period, the debt ratio (liabilities as a percentage of GDP) fell by about six percentage points to 36 percent. Net financial assets, however, amounted to 58 billion euros, achieving a growth of 13.7 percent, according to data from the report.

For more, make sure to check out our dedicated News section.

Germans could be left without cash if a threat of a general strike of 12,000 employees who transport money to ATMs is fulfilled. Although they could quickly pay with their bank and credit cards, the lack of cash would anger the Germans, since they, just like Croatians, like to pay with cash. On the other hand, some countries in northern Europe are even thinking about the abandonment of cash money altogether. Advocates say this approach would eradicate the grey economy and tax evasion, while the opponents warn about a loss of privacy, reports Večernji List on January 7, 2019.

The popularity of cash, despite the simplicity and security of bank card payments, is even growing in some countries. Germans, like Croats, make as much as 80 per cent of transactions with cash. According to the data of the Croatian National Bank, of the 179 million recorded receipts in 2017, as much as 87 per cent was paid in cash. However, the value of card transactions has grown to 37 per cent of the total turnover.

It should be noted that the largest card turnover is recorded during the summer and that 12 per cent of the amount of all card transactions is made with foreign cards, so it is likely that tourists mostly use them. If we take this into account, we can conclude that Croats pay with cards for just a quarter of their purchases. And they use much more their bank debit cards than credit cards.

Nevertheless, the popularity of bank cards is growing year after year, as well as the value of card transactions. Every consumer has 2.5 cards on average, and 79 per cent of citizens have at least one card. This shows that the problem is not the access to bank cards, but the will of the citizens to use them.

Local craftsmen and caterers mostly insist on cash payments, and the unwritten rule is that discounts are more substantial if you pay with banknotes. The reason is the high payment fees that card companies contract with the sellers of services and goods. Since these fees are often, especially in the case of a new company that has no financial history, higher than five per cent, entrepreneurs must increase their prices for that amount. As a rule, fees range from two to five per cent, and this cost is transferred to the consumers. That is why customers usually pay more with bank cards, especially in the case of larger purchases, which typically bring five per cent extra discount if you are ready to pay with cash.

On the other hand, Americans pay for almost half of all transactions with bank cards. Sweden and Norway are moving towards full cash elimination. In Sweden, for example, in five years the share of cash transactions fell from 50 per cent to just 20 per cent. Swedes trust banks and institutions and research has shown that they are not worried by either the 'Big Brother' issue or internet fraud. They recently abolished the largest banknotes, claiming that only criminals use them, and they consider the abandonment of cash an excellent way to fight the grey economy.

More news on the Croatian economy can be found in our Business section.

Translated from Večernji List (reported by Marina Šunjerga).

American Express cardholders will be able to use them until the end of 2019. Which replacement service will they opt for will depend on what the card companies will offer them. Therefore, some banks, as well as marketing agencies, have already begun preparations, including advertising campaigns, trying to win over some of about half a million American Express users in Croatia. PBZ is the licensed American Express partner in Croatia and earlier this year the bank announced activities that will allow card users to “continue with the uninterrupted use of all services and related benefits.” Unofficial sources say that PBZ will offer its customers UnionPay cards, owned by the world's largest card issuer, China UnionPay, reports Jutarnji List on November 13, 2018.

The Chinese card organisation has issued about five billion credits cards, and in 2015 it has overtaken the former leading card issuer Visa. PBZ said it could neither confirm nor deny its possible cooperation with UnionPay. “Our users have a high level of confidence in PBZ Group, which is confirmed by our research which shows that they fully believe that PBZ Card will offer high-quality replacement cards,” the bank said.

The latest events are also a chance for Diners to expand in the Croatian market. Its cards in Croatia are issued by Erste Card Club, which currently has 380,000 credit cards (Diners, Visa and MasterCard). At the moment, they see “high-quality opportunities for further growth and development of card business in the Croatian market.” Therefore, they are intensively working on "introducing new services, with an emphasis on improving the digital user experience.”

Recently, a fully digitized application process for issuing Diners Club credit cards has been introduced. New members can request a card without delivering paperwork or coming to a branch office, and the process is available to all citizens, irrespective of whether they are Erste Bank customers or not.

Given that American Express credit cards will be managed by the issuer itself in the future, it is expected they will no longer be in widespread use in Croatia, except at the corporate level. Amex has abandoned its licensing business model due to EU payment legislation, which limits multilateral fees charged by credit card issuers.

For more on banks in Croatia, click here.

Translated from Jutarnji List (reported by Marina Klepo).

ZAGREB, May 7, 2018 - The European Investment Fund (EIF) and UniCredit on Monday signed an agreement giving innovative companies access to 340 million euro.

ZAGREB, February 18, 2018 - The Zagreb Stock Exchange (ZSE) has launched a new trading platform intended for small and medium-sized enterprises in order to make it possible for them to have access to capital at all stages of their growth.

ZAGREB, February 14, 2018 - Finance Minister Zdravko Marić said on Wednesday that Croatia was above the global average in financial literacy but that there was a lot of room for progress given that more than half of citizens could not be defined as financially literate.