August the 3rd, 2022 - Are Croatian exchange offices doomed to failure as Croatian Eurozone accession rapidly approaches, and with the sending of the kuna to the history books set to take place on the 1st of January, 2023?

As Poslovni Dnevnik writes, six hundred kuna for one hundred euros has become a common amount that is obtained when exchanging these currencies during the height of the summer tourist season when you have to convert money at local Croatian exchange offices. That is all due to alter with the arrival of the euro as the country's official currency, and the need for Croatian exchange offices to exist at all will be greatly reduced. Many will close their doors and never open them again, reports HRT.

If you ask the tourists spending time (and money) here in Croatia themselves, everything is very clear and simple, adopting the bloc's single currency is a good move for Croatia. But when it comes to Croatian exchange offices, most of them anyway, they'll have to think about another business model entirely if they want to survive the introduction of the euro from the first of January next year.

"It will be difficult for Croatian exchange offices who will continue to try to work only in the foreign currency exchange business to survive because 80, 90 percent of the turnover takes place around the purchase and sale of euros, and without this turnover it will be difficult for them to survive," warned Sergi Gabor, president of the Association of Croatian Exchangers.

Financial experts have hope and believe that most Croatian exchange offices can be transformed and remain in business when the changeover happens, and that not all of them will be closed due to the demand for digital money, as well as savings and exchanges being done in other currencies.

"Perhaps there will be a continuation of turbulent economic trends at the level of Europe or the world, and in that case it will be possible that in Croatian exchange offices, there will be a tendency for people to be dealing with other currencies such as the Swiss franc or the US dollar,'' believes Hrvoje Japuncic, a financial expert.

For more on Croatian Eurozone accession, make sure to check out our dedicated politics section.

June the 25th, 2022 - For many Croatian exchange offices, this summer season will be their last. Croatia's Eurozone entry is set to take place at the very beginning of next year, and for a number of offices, the doors are being well and truly locked.

As Jadranka Dozan/Poslovni Dnevnik writes, the beginning of summer and the height of the tourist season is also the usual time of the "main harvest" for Croatian exchange offices, with the biggest turnovers in that niche market occuring during the months of July and August.

Last year, almost a third of the total annual turnover of authorised Croatian exchange offices was realised solely during those two summer months, and from the beginning of June to the end of September, 50 percent of the year-round turnover took place.

For many Croatian exchange offices, especially those for which these jobs aren't just a "side" activity, this summer, given the introduction of the euro at the beginning of next year, could be the last in which they remain in business.

According to the annual report of the Croatian National Bank (CNB) published this week, about 850 authorised Croatian exchange offices were active across the country at the end of last year, with a slightly higher number of them holding CNB licenses, a total of 1,146 of them.

Those who provided foreign currency trade services throughout the year or seasonally did so through approximately 3,500 Croatian exchange offices, where they traded a total of 31 currencies. However, out of 25.1 billion kuna in annual turnover (of which 18 billion kuna refers to purchases), more than 87 percent or 21.7 billion kuna was realised in euros (15 billion kuna through purchases, and the rest through the sale of euros). The majority of the remaining turnover refers to the US dollar (5.6%) and the Swiss franc (4.7% of the turnover).

Compared to pandemic-dominated 2020, last year's turnover within Croatian exchange offices increased primarily due to the recovery of the travel and tourism industry, by about 30 percent or almost six billion kuna. The first four months of this year also brought year-round traffic growth to offices.

According to the CNB, by the end of April, exchange offices across the country had generated a massive 6.73 billion kuna, compared to less than 5 billion kuna in the same period last year.

Authorised Croatian exchange offices achieved a record turnover back in 2017 (30.2 billion kuna), although in the meantime the inflows of tourist foreign currency grew. For example, in the record year of 2019, exchange offices made less than 30 billion kuna worth of foreign cash exchanges.

To a large extent, the explanation lies in the growing trend of non-cash payment transactions. By accepting foreign payment cards (cards issued outside of the borders of this country), transactions worth 20.8 billion kuna were realised last year.

Compared to the first year of the pandemic, 2020, it's equal to twice as much, compared to pre-pandemic 2019, not even four percent less, and compared to the exchange record in 2017, the value of transactions with foreign payment cards performed in Croatia last year was about 4.5 billion kuna higher.

There is no doubt that with the introduction of the euro in 2023, the number of CNB licenses for these jobs will fall even further. Most of the approximately (seasonally or year-round) 850 active Croatian exchange offices also perform other activities and currency exchange operations aren't their main activity.

The CNB estimates that they are the core business for approximately 200 legal entities, which in turn provide these services at approximately 400 exchange offices. It is also estimated that they employ between 600 and 800 employees.

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

March the 22nd, 2022 - Croatian exchange offices have been seeing a bit more traffic than they usually would at this time of year as people claim there is a ''euro shortage'' and that these offices are buying euros ''like oil''.

As Poslovni Dnevnik writes, the ongoing war in Ukraine is affecting everything, and the operation of Croatian exchange offices hasn't been immune. Since the Russian invasion began last month, there have been crowds outside of exchange offices across the country, and Croats are buying euros en masse. These queues and crowds, Croatian exchange office employees say, last for days.

"There's a lot of work to be done, and this currency is being bought just like oil is being bought in stores," saleswoman Sanja Dadasovic told RTL. Traffic has jumped up to 50 percent in recent days, and it isn't just euros that are being bought.

"The other day we had ladies who bought some dinars, Czech crowns and Polish zlotys, which is fine for us, but there is a huge demand for euros. We think that people are taking out their reserves,'' said Ankica Jurinovic-Ostojic, the owner of one Croatian exchange office in Zagreb.

"There's a shortage of euros"

“Mostly, we're talking about 4, 5, 7 or 10 thousand euros, but we have clients who come and buy and coins as well. It used to be that no one wanted to buy coins, but that's happening now as well,'' claimed Jurinovic-Ostojic.

"All the euros we buy now in our branches, we sell immediately at the same time. There's a shortage of euros. People are probably afraid of inflation and then they invest everything they have in gold,'' said Gabor Soregi, president of the Association of Croatian Exchange Offices.

Experts say there is no reason to panic

"Liquidity, capitalisation of the overall Croatian financial system is more than satisfactory, it has been and will continue to be, and as indirect members of the Eurozone, I think there is really no need for such activities," said Hrvoje Japuncic, a Croatian financial analyst.

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