February the 4th, 2022 - Croatian energy investment with a European Union (EU) plan to pump in a massive 6 billion euros is attracting a lot of talk among those in the sector.

As Poslovni Dnevnik/Darko Bicak writes, as announced back at the end of last year, the European Union recently presented a plan which, despite being controversial for some, will consider new investments in nuclear energy and gas thermal power plants. On top of that, it will make infrastructure environmentally sustainable, ie green, which means that it will be facilitated institutionally through EU funds and private investments in such projects.

The supplementary delegated act on the taxonomy of climate sustainable activities to mitigate and adapt to climate change, which covers certain energy activities in the gas and nuclear sectors, is particularly interesting for Croatia and Croatian energy investment because there are several projects that could be financed directly from EU funds on that basis.

First of all, we can look at the second block of the Krsko Nuclear Power Plant, which is primarily planned to be built by the neighbouring Slovenes, for which the first permits were issued last year. Croatia is not indifferent to the project and is likely to participate in it. The Krsko NPP was built back in 1983 and it has remained unchanged to this day. It represents an investment, as well as maintenance and the distribution of energy in equal proportions between the two neighbouring nations of Slovenia and Croatia.

Although there are no details about that yet, it is certain that such a model would be applied to Block 2. The estimated cost of the project is between six and 10 billion US dollars, according to green activists in the wider region who oppose expanding nuclear capacity in Krsko and point out that it is, in addition to being dangerous and archaic, too expensive and unprofitable in regard to technology.

It is interesting that most of the opposition to the upgrade of Krsko comes from Austria, where there is a common position of politicians, as well as from the public and activists that this project must be prevented at all costs. Over more recent years, Croatia has invested heavily in gas infrastructure, and a similar trend is expected in the coming period. The LNG project on Krk proved to be important and functional, as an example. All energy experts have warned for the past 20 years, as far as this project is concerned, that LNG gas is too expensive and unprofitable compared to natural gas coming through gas pipelines.

That being said, they also didn't deny that this is a strategic infrastructure project that will give Croatia and the wider region, through energy diversification, much greater geopolitical power in the event of a political or energy crisis in Eastern Europe or the Middle East. A certain level of instability in the Middle East has become a normal situation for several decades now, and trade and energy flows have learned to "live" with it. The current crisis between Russia and Ukraine has been going on for about ten years, and it has recently escalated again, so the possibility of a war that could range from a low-intensity hybrid conflict through a spatially and temporally limited armed conflict to something continental and of global proportions is something we don't even want to think about at the moment.

Gas prices have risen from about 30 US dollars per megawatt (MWh) to almost 100 dollars. Recently, gas on the reference European gas exchange TTF in the Netherlands was just under 80 dollars. Therefore, it is clear that the existing floating LNG, worth a massive 234 million euros, of which the EU gave Croatia 100 million, has already justified its existence today and the authorities are probably already planning the second phase of the project - building a fixed terminal on the coast and increasing the existing capacities of 2.6 billion cubic metres of gas per year. It appears that Croatian energy investment isn't going to stop there, either.

Croatia has turned almost all of its city heating plants, mostly owned by HEP, into gas power plants, and although the authorities have been pretending over more recent years that the Plomin C project doesn't actually exist, nor has it ever existed, it is increasingly likely that, with its originally planned coal technology, it will also be constructed as a large gas power plant, perhaps on LNG given that this thermal power plant has its own port for docking ships, either for unloading coal, or in the future on LNG.

Additionally, a plan of a private investment in a hybrid gas thermal power plant in Slavonski Brod with a total capacity of 500 MW and an estimated investment value of 420 million euros has been operational for about fifteen years now. Only the listed projects in half of NPP Krsko, the fixed LNG terminal, Plomin C and TPP Slavonski Brod total almost six billion euros and it is clear that the new and green EU classification of nuclear and gas technology will have a great positive effect on Croatia and Croatian energy investment as time goes on.

The presented EU proposal will have to be studied by national governments in the coming period, and before it is officially adopted. The fact is that the EU has 27 member states and that each of them has its own energy strategy and position on the positive or negative effects of a certain form of energy, but the EU has come to this in such a way that one or several countries cannot veto the decision. The EU's plan will be rejected only if 20 member states oppose it, and it is already clear that countries like the Netherlands and Denmark don't want gas involved in the Green Plan, because they use it less and less and sometimes even reject it, while on the other hand, gas is of existential importance for Germany.

The nuclear lobbies in the EU are led by France and the Czech Republic, which are the loudest of them all, and aren't typically opposed by many other countries, which have both realised that they will NOT ensure their energy independence for many years to come. Many green associations and institutions, on the other hand, warn that it will be a step backwards because it will make it difficult and stop many renewable energy projects and give the public the so-called Greenwashing, or a false notion which convinces the public that the products, goals and policies of this plan are environmentally friendly.

The Ministry of the Economy and Sustainable Development pointed out that the Republic of Croatia, in accordance with the stated policy and its strategic documents in the field of energy, "Energy Development Strategy of the Republic of Croatia until 2030 with a view to 2050" and the “Integrated National Energy and Climate Plan for the Republic of Croatia”, encourages the development of renewable energy sources and the strengthening of energy efficiency.

"In this policy, we can see a number of opportunities for the Croatian economy, especially in the development of new technologies dedicated to renewable energy sources. In order to ensure further economic development, as well as a sustainable transition to clean and climate-neutral technologies, we believe that the inclusion of investments related to natural gas and nuclear energy can have a positive effect on the decarbonisation processes. Of course, all of the above must be dedicated to the ultimate goal of decarbonisation, both of the energy sector and of the economy as a whole,'' said the aforementioned ministry, headed by Minister Tomislav Coric.

For more on Croatian energy investment, check out our politics section.

February the 1st, 2022 - Croatian covid rules for travel outside of the country's borders are in force as of today. On top of that, a few other things are changing in regard to the epidemiological measures.

As Poslovni Dnevnik writes, when will the self-isolation rule for students be abolished, when does their mass testing begin? How will all of this be implemented? Are the schools ready for it? What will the new rules for determining the need for self-isolation look like amid the spread of Omicron and when can the application of these new Croatian covid rules be expected? These are all of the questions floating around as new Croatian covid rules enter into force.

The deputy director of the Croatian Institute of Public Health, Ivana Pavic Simetin, advisor to the Minister of Education Bozo Pavicin and the president of the Split-Dalmatia branch of the Association of Primary School Principals. Djuro Baloevic, all talked about this as guests of a recent Croatian Radio show.

Ivana Pavic Simetin first spoke about today's Croatian covid rules, with a special emphasis placed on people planning to travel outside of Croatia. She said the move was done to harmonise Croatian covid rules with those regarding travel at the European Union (EU) level.

''For the first time now, the European Commission (EC) is prescribing how long a covid certificate based on vaccination lasts. These certificates are valid for nine months as of full vaccination from today. The booster dose validity is unlimited for now, but administratively speaking, it will most likely remain valid for year from its receipt. If the scientific evidence reveals anything new about the long-term immunity following a person having their booster dose, then it would be extended depending on new findings,'' she said.

For those who were vaccinated with two doses of the vaccine and then caught and recovered from the new Omicron variant of the novel coronavirus, she said that as far as EU digital certificates are concerned, all three types of certificates can be requested.

''One can be requested based on vaccination, one can be requested based on recovery, and then someone who catches Omicron following their vaccination can get a covid certificate which is valid for six months based on their recovery,'' she explained.

Regarding the shortening of the self-isolation period in the wake of Omicron, she said that the document which will go over every detail will be agreed upon in the coming days.

"The whole idea is based on new knowledge about the Omicron variant,'' said Pavic Simetin.

For all you need to know about coronavirus specific to Croatia, make sure to bookmark our dedicated section and select your preferred language if it isn't English.

January the 31st, 2022 - Around 50,000 Croatian employees are taking home among the lowest wages in the entire European Union (EU). These workers are primarily from the wood/wood processing, textile and leather industries.

As Poslovni Dnevnik writes, the Croatian minimum wage at this moment in time stands at 624 euros per month, gross. The highest in the EU is unsurprisingly 2,257 euros in Luxembourg, and in only four countries in the European Union do workers receive a lower minimum wage than here in Croatia. In Hungary, Romania, Latvia and Bulgaria, people take home the EU's lowest minimum wage of a mere 332 euros.

“I should be able to afford to buy some decent clothes, have some sort of normal social life life, such as being able to go to watch a film at the cinema or going to watch a match. What about holidays? It's all getting harder,'' said one person, who added that if they're havint to work all twelve months of the year and they can't even go on holiday, then they think it's beneath the honour of every person.

The average Croatian household spends more than two thousand kuna a month on food alone. Another 1.2 thousand kuna goes to housing costs and another 1.2 thousand to transportation. That means that for pure and simple survival, it costs 4.5 thousand kuna per month, and the minimum wage in Croatia at the moment is 3750 thousand kuna. That is without the latest price increases. Across the European Union, as trade unionists point out, the poverty indicator is the data on how much is spent on food, as reported by Dnevnik.hr.

"The share of food costs on average across the European Union stands at about 13 percent, in more developed European Union countries, it is below 10, and in Croatia more than it's more than 27 percent without any increase," said Kresimir Sever from the Independent Croatian Trade Union.

Compared to the Netherlands, the minimum wage is almost three times higher: 1,725 ​​euros, which is almost 13 thousand kuna per month. They spend less than 13 percent of their salaries on food, compared to more than 27 percent here in Croatia, and the price of electricity is a little less than 13 euro cents per kilowatt hour, which is even slightly lower than it costs in Croatia.

When asked if they think that the time will come when the minimum wage for Croatian employees stands at 13 thousand kuna, they answered: "I think so. When young people realise that they shouldn't run away but stay here and fight against those who do evil.'' Some naturally jaded Croatian employees have a different opinion: "I don't think so, I don't believe in fairy tales."

While the meat industry is announcing a rise in meat prices of up to 30 percent, the unions are asking the Croatian Government for all measures to help - they should lower VAT on energy, offer higher aid to the poorest among us, and lower excise duties on fuel, with the addition of more price caps. They also pointed out that chain price increases are on their way in the coming months, and the minimum will remain the same until next year.

For more, check out our lifestyle section.

January the 30th, 2022 - An enormous EBRD Croatian investment took place last year, with the investment of a massive 176 million euros in various private sector projects which were primarily focused on supporting domestic companies affected by the global coronavirus pandemic.

As Poslovni Dnevnik writes, according to the final results, the European Bank for Reconstruction and Development (EBRD) recorded its largest investment in Croatia in three years in 2021.

The total amount of EBRD Croatian investments to date stands at a huge 4.1 billion euros, and the current value of the portfolio is 850 million. During 2021, 200 million euros were withdrawn, which shows that EBRD funds are being used to provide active support to the Croatian economy.

"The EBRD is very active in Croatia, but the EBRD isn't only there to finance projects. Our team based in the City of Zagreb raised more than 100,000 euros for earthquake victims in Sisak-Moslavina County thanks to the initiative of its employees and the EBRD's Community Initiative programme,'' said Victoria Zinchuk, the EBRD Director for Croatia.

The funds raised will support the equipping of the Vrbina Sisak Children's Home, the construction of a new "Miracle Room" for children with special needs in the region, and the construction and renovation of several private homes for vulnerable families.

Renewable energy sources

The EBRD's focus throughout the year 2022 will be on developing and stimulating the renewable energy market. This approach is in line with the priorities of the Government of the Republic of Croatia, which recently introduced a new programme of support for investments in renewable energy sources, which is expected to attract new investments in the sector and contribute to achieving renewable energy goals, including objectives set out in the National Recovery and Resilience Plan.

It is crucial for Croatia to take the steps necessary to improve its overall electricity network in order to enable the best possible connection of renewable energy sources to the national network. In partnership with the Croatian Economic Renewable Energy Association (OIEH), the EBRD has developed an action plan identifying priority investments and activities to enable the smooth integration of renewable energy sources into the country's existing energy network.

The EBRD and OIEH have also developed a comprehensive guide for investors in the sector, which is available on the OIEH website. The study was financed by the Bank in the amount of 150,000 euros. The EBRD has also identified three renewable energy projects that it plans to finance soon, making it a leading investor in this particular sector.

Entrepreneurs and companies are also getting a look in

The EBRD's SME Business Advisory Programme has also had a very dynamic year.

With the support of the European Investment Advisory Hub and the EBRD's Small Business Impact Fund, more than 32 advisory projects were launched during the year. In addition to that, several training sessions were organised for female entrepreneurs, women on supervisory boards, small and medium enterprises in the tourism and hospitality sector which were negatively affected by the crisis caused by the ongoing coronavirus pandemic, as well as a webinar for start-ups on "Sources of funding".

The European Commission (EC) has selected the EBRD as its partner who will work closely with the Ministry of Physical Planning, Construction and State Property to work closely on legal and regulatory reforms.

Back in 2021, the EBRD invested a total of 10.4 billion euros, the second best result in a row, and this bank's support remains an important factor in the recovery of new markets from North Africa to Central Asia.

For more on this EBRD Croatian investment and much more, check our our dedicated politics section.

January the 30th, 2022 - A weaker Croatian national currency (kuna) during Croatian Eurozone accession could cause more issues than solve them.

As Poslovni Dnevnik/Ana Blaskovic writes, with Croatian Eurozone accession rapidly approaching, set to occur at the very beginning of 2023, one of the main issues will be the rate at which the kuna will be exchanged for the Eurozone's single currency. There isn't really much room for maneuver as the rules require targeting around a central parity of 7.5345.

For years, critics have been making negative remarks about the Croatian kuna for being too strong, arguing that it makes the currency uncompetitive when it comes to exports, and the idea of ​​depreciation was once supported by former president Kolinda Grabar-Kitarovic.

The Croatian National Bank (CNB) once calculated that the depreciation of the kuna by ten percent would currently increase the debts felt by residents, companies and even by the state, whose contracts have a currency clause of 50 billion kuna. All of the aforementioned now comes a detailed review of the likely repercussions.

"The negative effect of kuna depreciation on the balance sheets of Croatian sectors outweighs the positive foreign trade effect of depreciation," concluded research author Ozana Nadoveza Jelic, an advisor at the Modeling Directorate, and Rafael Ravnik, an economic analyst from Macrode.

In their paper entitled "Dependent on the Euro: The Macroeconomic Effects of Exchange Rate Changes in Croatia", the duo concluded that in the medium term, net exports would benefit relatively slightly from the kuna's depreciation, but that all domestic sectors would end up paying a much higher price.

The change in the exchange rate of the kuna against the euro would be reflected through the trade channel, ie foreign trade, in which a short-term decline would occur first, followed by an increase in net exports.

The second effect is on the balance sheet of the sector of companies which, thanks to their open exchange rate position (where debt relief also depends on the exchange rate) are faced with an increased burden of loan repayment. Consequently, they'll reduce investment, which spills over to the rest of the economy, causing a reduction in capital accumulation in the medium and long term, and thus an effect on potential GDP.

At the same time, households will also be dealing with the burden of repayment, as well as having their financial wealth denominated in euros, and there will be a further reduction in real disposable income due to rising consumer basket prices.

The state doesn't go through quite the same effect thanks to the ability to borrow in foreign currency, but the repayment burden will grow for it as much as it will for regular citizens (as ultimately it is all the responsibility of taxpayers), and the higher debt burden will consequently raise the country’s whole risk premium.

In this vicious circle as Croatian Eurozone accession comes knocking, the next step would be the growth of all interest rates in the country, one of the factors of which is the riskiness of the state.

For more on Croatian Eurozone accession, check out our politics section.

January the 18th, 2022 - Plenkovic has discussed the impending Croatian Eurozone entry and told people who have kuna in cash at home or wherever else to bank it to make their lives easier when the transition happens.

As Poslovni Dnevnik writes, Plenkovic also reminded people of Croatia's entry into the EU back in July 2013 and the referendum by which the Croatian people confirmed their desire to enter the bloc.

"The Schengen zone and the Eurozone are the only two deeper integrations that Croatia needs to join at this point. The year 2022 is the year of decisions on both," said the Prime Minister.

"Back in 2017, we launched a public debate on the introduction of the euro in Croatia, and a few months later the government adopted this strategy. Why is Croatian Eurozone entry happening? Because we're already a very highly euroized economy,'' he said, noting that 70 percent of tourism revenues come from tourists from EU member states which typically have the euro as their main currencies. He also mentioned that most savings and loans in Croatia are tied to the euro, as N1 also reported.

"Both savings and loans and trade and tourism revenues are linked to the Eurozone," Plenković said. He also spoke about the law on the introduction of the euro as the official currency in Croatia. "The goal is for the adjustment to go smoothly and to enable the economy to function, for people to be informed of things in good time and for Croatian Eurozone entry to be done in a fair and proper way."

In just one year, the only means of payment in Croatia will be the euro, and the kuna will enter the history books.

"This time in one year, the only means of payment in Croatia will be the euro. It's very important to understand the speed of completion of this process, with the introduction of the euro, everything in kuna in the banks will automatically be converted into euros,'' Plenkovic said.

He also spoke about highlighting prices in both euros and kuna.

"Prices will be highlighted in kuna and euros for another year, and for the whole of 2023," he added, noting that the double price highlighting will start in September this year and will continue throughout next year.

"Everyone will be able to exchange kuna for euros in banks, at Fina and at the post office. The transition process will take another year after Croatian Eurozone entry. An additional element is that after that deadline, people will be able to bring their kuna into the CNB and exchange that money for euro banknotes,'' noted Plenkovic.

"I'd like to invite people who have kuna cash at home to come and deposit it at the bank, because the money in kuna will automatically be converted into euros," he concluded.

For more, check out our politics section.

January the 15th, 2022 - The European Commission (EC) has told the Croatian Government that there will categorically be no deadline extension for spending on reconstruction projects for post-earthquake procedures.

As Index vijesti writes, the European Commission has refused to extend the deadline for the Republic of Croatia to use the funds from the Solidarity Fund and added that there is no consideration whatsoever being given to the proposed deadline extension of eighteen months to use the funds from the day the money was paid to the country, Jutarnji list unofficially reported.

Another Croatian publication, Telegram, has since published accurate quotations from a letter from the European Commission sent to the Croatian Government. It is clear from the letter that Croatia cannot receive a deadline extension for the spending of a massive 5.1 billion kuna from the Solidarity Fund.

"It was clarified that the EU Solidarity Fund Regulation doesn't provide for an extension of eighteen months for its implementation, and my colleagues explained that the costs of the first damage as a result of the original event (Zagreb earthquake) back in March 2020 are acceptable. Given its limited amount and timeframe, the EU Solidarity Fund should be used for emergency rehabilitation, while other means are more appropriate for significant and long-term reconstruction,'' reads the European Commission's letter signed by Sofia Alves of the Directorate-General for Regional and Urban Policy of the EC.

This means that the Republic of Croatia will need to return part of the amount totalling 5.1 billion kuna because it will not be able to spend it until June the 17th, when the deadline is set.

Croatia will have to finance these projects contracted so far from other EU sources

The European Commission also requested that the Croatian Government's decision to establish special departments within the Ministry of Construction and Physical Planning, which were established exclusively for work on the Fund, be sent.

Special services within the Ministry were established only in December last year, one entire year after initially receiving the funds. They also noted that the funds of the Solidarity Fund are intended for emergency operations after damages, while the funds of other funds can be used for other projects.

On December the 27th, Prime Minister Andrej Plenkovic said he hoped that the European Commission would accept Croatia's argument for a deadline extension. It seems that there will be none of that, which means that the country will have to finance the projects agreed so far from other EU sources, which means less money for development projects.

Plenkovic's ministers: Nobody sought postponement

Plenkovic's ministers, Obuljen Korzinek, Bozinovic and Horvat all claimed that no one had actually asked the European Commission for a deadline extension, nor that this letter published by Telegram (linked above) was rejected.

"These are incorrect allegations, the merits of the letter were to confirm what was discussed at the meeting, and the implementation of the projects financed from the Fund was discussed, as was the method of reporting. The letter reads the follow-up of our technical meeting with the EC during December and at which we agreed on the dynamics of further work. The aim of the letter was to confirm what was agreed at the meeting,'' claimed Obuljen Korzinek.

For more, check out our politics section.

January the 14th, 2022 - There needs to be many more Croatian charging stations dotted around the country to meet EU standards, despite the fact that the purchase of electric cars in the bloc is still somewhat modest.

As Poslovni Dnevnik/Darko Bicak writes, although the number of electric cars in some European Union countries has already reached an enviable level, the fact is that in most others it is modest, to say the very least. The main reason, with the still relatively high purchase price, is the insufficient charging infrastructure for such vehicles across the bloc.

There are around 600 Croatian charging stations located up and down the country, suitable for about 2,000 electric cars. It may seem to those not in the loop that this is enough, because, by comparison, for the 2.8 million registered Croatian petrol and diesel motor vehicles, we have 800 fuel stations.

However, e-mobility technology is somewhat different and requires longer and more frequent charging and as such a denser network of charging stations, which in turn entails the adjustment of a country's electricity network and overall capacities. This could soon be applied here in Croatia because, according to the Croatian National Association for e-Mobility Circuit, which is part of the European Association for Electromobility - AVERE, the new EU plan is for member states to create e-charging capacities at level the level of 10% of the total fleet, which means that within the domestic, framework we would theoretically need to have have tens of thousands of Croatian charging stations that could theoretically serve 280 thousand vehicles.

National goals

''For the last six months, we've been working hard on the new regulation for alternative fuel infrastructure (AFIR), which is a strategic document of the European Union that defines the use of alternative energy sources, namely electric vehicles. The difference between the previous directive and the new regulation is that this regulation is mandatory, and the directive serves solely as advice to member states. We're currently working on regulations that will oblige Croatia to adhere to these new rules. With the arrival of these regulations, we can expect an even greater number of super fast vehicle chargers, not only for personal transport, but also for truck traffic on the stretch from Varazdin to Rijeka and Zagreb to Ljubljana in Slovenia,'' explained Hrvoje Prpic, President of the Circuit.

He added that the new AFIR regulation significantly better defines the publicly available infrastructure for charging electric vehicles, and most importantly, the regulation seeks to ensure the simplest possible increase in the number of charging stations across the European Union. AVERE's proposal is for each country in the EU to install enough infrastructure for at least 10% of the total number of vehicles registered in the country, which in Croatia, for example, would be much more infrastructure than is currently needed for the existing number of electric vehicles.

Circuit believes that this is a great way to motivate future vehicle buyers to consider switching to zero-CO2 vehicles, because in that case they would come to empty Croatian charging stations and not worry about needing to find a place to charge their car, and on the other hand, these charging stations would be co-financed by the EU, so such expansion of such infrastructure would not cost the state all that much.

In addition to that, AFIR would set goals in order to significantly strengthen the infrastructure on the TEN-T corridor - a single trans-European road network that connects all major transport points in Europe.

This means that the number of charging stations for light and heavy electric vehicles would be further increased across Croatia and in its neighbouring countries. AFIR requires that at least one charging station for electric trucks or buses with two chargers up to 350 kW be available, and for light passenger vehicles, there must be at least one charging station with two chargers up to 150 kW on the TEN-T corridor by the year 2025.

By 2030, that number of fuel stations must be doubled. On all additional roads connected to the TEN-T corridor, EU member states must ensure a uniform network of fuel stations every 100 kilometres. According to AFIR, charging for vehicle charging should also be possible with the help of bank cards, so all charging station operators should install card readers at their future Croatian charging stations.

This would greatly facilitate the charging of the vehicles belonging to many electric vehicle drivers, especially for tourists who are unfamiliar with the charger network in the country they are visiting.

For more, check out our dedicated lifestyle section.

January the 1st, 2022 - Croatian Eurozone entry is rapidly approaching, and if all goes to plan, the kuna will enter into the history books early next year. How will we go about exchanging Croatian kuna for the euro, however? There are slightly different rules for coins and for banknotes.

As Poslovni Dnevnik/Ana Blaskovic writes, if anything in the economic field will mark 2022, it will be all of the hurried final preparations for the introduction of the euro and Croatian Eurozone entry in 2023. The green light for a step towards stronger integration into the European Union (EU) should, apparently, be given in the summer of this year when the exact date of the final transition will be revealed.

Replacing the national currency with the European single one is a massive logistical undertaking for which preparations are underway with the assumption that we will be paying for items in euros from the first day of 2023. Credit and other financial institutions have been in talks with regulators for some time about how to change their IT systems and adjust all of their business processes, a cost that, in the case of banks alone, is estimated to stand between 80m and 100m kuna.

According to the experience of other countries that joined the euro in the past, the central bank expects that when exchanging the kuna for the euro, about 36 percent of the amount of coins in circulation will be returned, ie 1.1 billion pieces of kuna coins and 99 percent of the amount of banknotes, ie more than 500 million pieces of kuna banknotes. Banknotes will be able to be exchanged for euros on a permanent basis, but the deadline for coins will be limited to three years from the introduction of the euro as Croatia's official currency.

The experiences of other European Union countries which are in the Eurozone are diverse. Twenty years after the euro emerged as the single currency, it is estimated that there are still around 8.5 billion euros left in the former national currencies, either under people's mattresses, in old jackets or as souvenirs from the past. The largest amount falls on the unreplaced German marks in which the (recalculated) amount stands at a whopping 6.3 billion euros.

It is followed by the Austrian schilling, which accounts for another 505 million euros, and the Belgian franc, accounting for 428 million euros. In neighbouring Slovenia, for example, the former Slovenian tolars account for 80 million euros, according to Bloomberg.

Part of the reason for nostalgia or forgetfulness probably lies in the fact that some countries have left an unlimited deadline to exchange their currencies, like Germany, at least when it comes to banknotes. Spain, France and Austria, on the other hand, have long since closed the door to such a possibility, leaving any pesetas or francs to become collector's items for those nostalgic about pre-euro Europe.

Croatia already has experience in exchanging currencies. When the kuna was introduced after the stabilisation programme on May the 30th, 1994, it replaced the Croatian dinar as a temporary currency issued by the Ministry of Finance with the signature of the Minister. The CNB exchanged dinars on a regular basis until the end of 1994 and subsequently until the end of June 1995. With this being a memory, it's hoped that Croatian Eurozone entry will also be that bit smoother for a country that has been very much in transition in many respects since the end of the Homeland War.

"Since the replacement of Croatian dinars hasn't been possible since mid-1995, Croatian dinar banknotes have exclusively numismatic value," the central bank said. According to their data, 37 percent of the total printed 513.6 million dinar banknotes remained unchanged, so it will be interesting to see how much kuna will remain nostalgically in pockets, down the sides of sofas, under beds and in varying collections of old and foreign money that many people keep.

"Given the fact that after three years, kuna coins will no longer be able to be exchanged for euros and will no longer play a role as a means of payment, they will be able to be adequately disposed of without any risk of reappearing on the exchange. Therefore, cooperation has been initiated with the Ministry of Defense in finding adequate, supervised and protected space that the Croatian National Bank will lease for the storage of withdrawn kuna coins,'' the CNB said, adding that they expect a lease agreement with the Defense Ministry in regard to that.

In parallel with their withdrawal from circulation, kuna banknotes will be successively destroyed with banknote processing systems that have the ability to totally destroy them. Four months before the introduction of the euro, banks will be supplied with banknotes, and a month later with euro coins. When the countdown begins in the last 30 days, the euro will be ready in the offices of Fina and Croatian Post (Hrvatska posta), and the indirect pre-supply of companies and shops will begin.

On the very day of the introduction of the euro, ie Croatian Eurozone entry, the "big bang" approach will be applied to savings and loans. This means that all kuna savings and deposits on current, savings and other accounts, as well as all loans will become euro loans at a fixed exchange rate free of charge. The key assumption is that any change in interest rates (in the case of variable interest rates) must not be to the detriment of the client, while fixed interest rates will remain the same.

The first two weeks after Croatian Eurozone entry will be a period of double circulation in which cash can be exchanged free of charge at banks, Fina and post offices, and then only at banks for which they will be entitled to charge a fee. A year later, the Croatian kuna will be able to be exchanged for euros only at the Croatian National Bank, free of charge.

Since one of the biggest fears that accompanies the whole saga surrounding the euro is the fear of rising prices, which is no longer insignificant in the face of accelerating inflation, it will be crucial to dual disclose the prices that will last at least one year starting in August. An information campaign will follow in which people will be encouraged to deposit as many kuna coins and banknotes as possible to banks in order to easily convert them to euros at a fixed exchange rate and free of charge on the day of the introduction of the euro.

For more on Croatian Eurozone entry, follow our politics section.

December the 30th, 2021 - One German financial expert has claimed that Eurozone entry for Croatia, which is due to take place quite soon, is still premature. Is the country ready for the changes? Apparently not, according to Otmar Issing.

As Poslovni Dnevnik writes, in addition to joining the Schengen area, Croatia's Eurozone entry has been cited as one of the main goals of Croatian foreign policy for years now. This goal should be achieved at the beginning of 2023, for which Croatia has the support of Brussels.

That said, there are some economists such as former European Central Bank (ECB) Executive Board member Otmar Issing of Germany who believe that Eurozone entry for Croatia would be premature, Deutsche Welle reports.

As he said in an interview with the Frankfurter Allgemeine Zeitungu (FAZ), currently no country is ready to join the Eurozone. "At the moment, I can't see any country that is ready enough to join the Eurozone," Issing told FAZ on the occasion of the recent twentieth anniversary of the introduction of the euro into circulation back on January the 1st, 2002, which those of us who grew up in Europe remember so well.

"It can't be said that every new member of the Eurozone necessarily contributes to the weakening of the euro, but these countries must guarantee some lasting stability. It isn't enough to get ready for the wedding and then return back to your old habits once you're married,'' said Issing, who also played the role of ECB chief economist from 1998 to 2006 and was credited with strategically planning the introduction of the euro as the bloc's single currency.

The last EU member state to enter the Eurozone in 2015 was Lithuania, and currently Bulgaria is also aiming to join. In fact, according to the membership agreement, all members of the European Union are obliged to accept a common currency when they meet the criteria, the only exceptions to this was the United Kingdom, which kept pound sterling, and Denmark.

Issing believes that the heterogeneity of Eurozone member states and thus different focuses when it comes to interests is already a big problem for the ECB. He believes that the governors of the national central banks should follow a common course and not simply blindly follow national financial policy. Issing also defended the euro against accusations that its introduction has made everything more expensive.

"It can look like that when it comes to purchasing daily necessities, so that's the impression people have. But when we look at spending which occurs in regard to most of the household budget, such as rent or heating costs, those costs have remained stable even after the introduction of the euro,'' Issing told FAZ.

Issing, who previously held the same position at the German central bank before taking office at the ECB, said the decision to print non-national symbols on euro banknotes at the time was a decision that proved correct in the end.

“Imagine if the French wanted to put Napoleon on their banknotes. How would the countries who were occupied by Napoleon react to this? That's why we decided on the symbolic motif of the bridges,'' Issing concluded.

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