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.

ZAGREB, 9 March 2022 - The government's proposal to introduce the euro as the official currency in Croatia on 1 January 2023 divided MPs on Wednesday, with some seeing multiple benefits and others claiming that it will further lower living standards.

Darko Klasić of the Croatian Social Liberal Party (HSLS) said entry to the euro area would give Croatia and its economy a huge geostrategic umbrella in turbulent times.

Krešo Beljak of the Croatian Peasant Party (HSS) said Croatia was "finally" introducing the euro.

Anka Mrak Taritaš of GLAS said entering the euro area was a success for every country and that she hoped the benefit of its introduction would surpass possible setbacks.

Speaking of the benefits, she mentioned the removal of the currency risk, a reduction of borrowing costs, lower transaction costs, export and foreign investment incentive.

"This is the best thing that could have happened to Croatia," said Boris Lalovac of the Social Democratic Party.

Grozdana Perić of the ruling HDZ said Croatia had met all the conditions for introducing the euro, such as stability of prices, the exchange rate and public finances.

Marijan Pavliček of the Sovereignists said living standards "will additionally fall."

He said the prices of goods and services increased considerably during the first year in the countries which introduced the euro, while salaries and pensions did not, and that Croatia would be no exception.

The average pension will be €300 and a pensioner will give 10% of their pension for bread, he added.

Zvonimir Troskot of Bridge said the Croatian economy was not ready for the euro area, that not one serious structural reform was carried out, that Croatia was not absorbing EU funds in a timely fashion, and that it did not protect farmland nor have a flexible economy.

He said entry to the euro area would accelerate emigration.

Stephen Bartulica of the Homeland Movement said the euro served strong economies like Germany and the Netherlands, and warned about the irresponsible conduct of some banks and funds in the euro area.

When Greece was being bailed out, the calculation was that it must not leave the euro area because the owners of the Greek debt were German and French banks, which would not have survived the shock, he added.

For more information on Croatia's adoption of the euro, check out our dedicated business and politics sections.

ZAGREB, 3 March 2022 - The government on Thursday sent the parliament a bill on the introduction of the euro as legal tender in Croatia for first reading, and, among other things, the bill concerns the basic principles of euro introduction, possibilities of exchanging kuna for euros and the period of both currencies being in use.

Finance Minister Zdravko Marić said the bill defines that, after the Council of the EU decides to introduce the euro and adopts a regulation determining a fixed conversion rate, the government will make a decision announcing the date to introduce the euro, the fixed rate of conversion, the start and end date of both currencies being in use, and the start and end date of dual price display, as well as other issues related to euro introduction.

The bill also defines fundamental principles to introduce the euro, including the principle of consumer protection, the principle of banning unjustified price increases, the principle of continuity of legal instruments, the principle of efficiency and economizing, and the principle of transparency of consumer information said Marić.

Cash exchanges will be possible in banks, FINA financial agency branches, and post offices for a period of 12 months as of the introduction of the euro.

"Citizens will be able to exchange 100 notes and 100 coins per transaction without any fee. After the 12 months expire, exchanges will be conducted in the Croatian National Bank without any fee, and it will be possible to exchange notes for an unlimited period and coins for a period of three years after the introduction of the euro," he underscored.

The period of both kuna and euros being in circulation will last 14 days after euro introduction. The bill also contains details regarding exceptions (poker machines, slot machines, ATMs).

The bill also contains regulations regarding dual price displays as a measure to protect consumers. Commercial enterprises will be obliged to show dual prices clearly, visibly noting the exchange rate. That obligation will apply as of September this year and ends at the end of 2023.

The bill defines also exceptions from dual price display where that isn't practical, for example at market stalls, mobile sales, farms, warehouses, slot machines, recyclable packaging, gift cards, and so on).

The bill defines rules for the conversion of deposits in accounts, kuna payment orders, kuna loans, kuna leasing contracts, and the like as well as adjusting interest rates where necessary. The bill also envisages the obligation to report to clients about the conversion, which must not put consumers in a less favorable position than the one they would be in if the euro had not been introduced.

The bill also brings rules related to preparing the budget and financial plans for the year preceding the year of euro introduction, rules for business bookkeeping, rules on reporting, bodies in charge of oversight, and rules related to violations.

"And that is assuming Croatia meets the set conditions and the process of introducing the euro is completed and the euro is introduced on 1 January 2023," said Marić. 

A total of HRK 32.8 million of budget bunds has been secured in 2022 to implement the bill, plus an additional HRK 3.6 million in 2023 and HRK 0.9 million in 2024.

A total of HRK 13.3 million has been secured in the state budget for the financial plans of extra-budgetary users in 2022, and HRK 1.4 million in 2023.

County budgets for 2022 have been secured HRK 5.78 million while city budgets have HRK 15.89 million secured for 2022 for the implementation of the law.

Public consultation on the bill was conducted between 17 January and 15 February 2022 and 128 comments were submitted. The bill will be discussed under the regular procedure.

For more, check out our politics section.

ZAGREB, 10 Dec 2021 - Finance Minister Zdravko Marić said on Friday that the bill on introducing the euro currency in Croatia was being prepared and the draft could be outlined in mid-January while its final adoption could be expected in April next year.

In addition to that bill, it will be necessary to amend 46 laws and 70 by-laws prior to the euro changeover, Marić said at a conference on Croatia's accession to the euro area, organised in Rovinj by the Večernji List daily and Istria County authorities.

The blueprint for the euro adoption envisages that on 1 January 2023 Croatia ought to be ready to enter the euro area while the formal announcement of accession to the euro area is expected mid-2022.

"At that moment, Croatia will practically enter the final phase and the preparations for the euro changeover will have to be stepped up," said Marić and recalled that almost 1.1 billion coins and 500 million kuna banknotes have to be withdrawn and banks, post offices, Fina and companies need to be pre-supplied with sufficient euro coins and banknotes.

The financial sector will have to adapt and then there is one huge common task and that is to inform and protect consumers as an integral principle of the entire process.

Prices will have to be expressed in both currencies as of August next year and that should also help alleviate inflation pressure.

"As of 1 January 2023 we will change over to the euro overnight and then have another two weeks for both currencies in circulation and citizens will be able to continue to pay in kuna but after that payments will be in euro. The dual prices will remain for at least one year," he underscored.

"Prime Minister (Andrej) Plenković and (HNB) Governor (Boris) Vujčić and I are lobbying our European colleagues for Croatia to be the next country to enter the European monetary area. We all know that we have a highly eurorised society and economy. And the HNB too, is integrated into the European system of central banks, so it is natural to head towards what is stipulated in EU accession agreements," he said.

The conference further heard that despite some of the economic risks that may occur by relinquishing the national currency, changeover to the euro opens a series of economic opportunities.

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ZAGREB, 10 Sept 2021 - The European Commission and euro area Member States on Friday signed a Memorandum of Understanding (MoU) with Croatia outlining the practical steps that will allow the country to begin producing euro coins when it receives the go ahead to join the euro area.

The memorandum, signed in Brdo pri Kranju, Slovenia, regulates issues related to the necessary preparations ahead of and up to the actual minting of euro coins, including the acquisition and production of minting tools and coin test runs.

The MoU was signed by Executive Vice-President Valdis Dombrovskis, European Commissioner for Economy Paolo Gentiloni, President of the Eurogroup Paschal Donohoe and Croatian National Bank Governor Boris Vujčić.

The HNB said in a statement that based on the document Croatia could launch preparations, that is, start making a detailed scenario for transition to the euro, start arrangements for the distribution of euro coins and the withdrawal of the Croatian kuna during the changeover, and the selection of its euro coin national side designs.

It can also start technical preparations for the common side of the euro coins, begin preparing mints for euro coin production and buying and making tools necessary to make coins as well as start with coin test runs and start making euro coins.

The Memorandum enables the continuation of preparations for the production of euro coins with the national side and marks an important step in our plan to make everything ready for the introduction of the euro in 2023, HNB Governor Vujčić was quoted by the HNB as saying, noting that Croatia remained committed to achieving that goal.

The EC, too, reported about the signing of the document, citing Executive Vice-President Dombrovskis as saying that the EC continued to support Croatia in its efforts to join the euro area, from which, he said, it stands to benefit greatly.

"However, before it can adopt Europe's single currency, Croatia must first meet all Maastricht criteria and continue to make progress on technical preparations," he said.

Commissioner Gentiloni welcomed Croatia's commitment to joining the euro area, stressing that it belonged there.

He said that the EC would continue supporting Croatia in its preparations and efforts to meet the convergence criteria.

Croatia is still not a member of the euro area but the kuna has been part of the exchange rate mechanism (ERM II) since 10 July 2020.

The signing of the MoU is one of the normal preparatory steps when a non-euro area Member State intends to join the euro area.

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ZAGREB, 21 July, 2021 - The Croatian coat-of-arms, a geographical map of Croatia, the marten (Croatian: kuna), the Glagolitic script and Nikola Tesla are motifs proposed for the Croatian side of euro coins, the Croatian National Bank (HNB) said on Wednesday.

The HNB Currency Committee today defined the final proposal for motifs for the national sides of future Croatian euro coins, which will now be considered by the National Council for the Introduction of the Euro as Official Currency in the Republic of Croatia, and then the government will adopt a conclusion.

The Croatian coat-of-arms will be used as a background on all coins, and other motifs will be used on coins of different denominations so that the 2 euro coin will feature a geographical map of Croatia, the 1 euro coin the marten, the 50, 20 and 10 cents coins Nikola Tesla, and 1, 2 and 5 cents coins the Glagolitic script.

The HNB said the main criteria for the selection was that the motif is acceptable to the general public and that it is a national symbol.

The rating given by citizens via an online survey at euro.hr, in which nearly 50,000 citizens took part, and a structured national survey on a sample of 1,000 citizens also influenced the Committee's final decision.

Based on the selected motifs, the HNB will announce a tender for the design of the national side of the euro coin. In mid October, the HNB will send the design of the motifs to the European Commission and the Council of the European Union, the press release said.

The production of euro coins with the Croatian national side should start at least six months before the introduction of the euro, that is the decision of the Council of the EU that Croatia is introducing the euro.

For more about politics in Croatia, follow TCN's dedicated page.

ZAGREB, 19 March, 2021 - The percentage of Croatian citizens who support the adoption of the euro in February this year has reached 45%, up by four percentage points from 41% in a previous survey, conducted in March 2020, the Croatian National Bank (HNB) said on Friday.

The fourth public opinion poll on the adoption of the euro was carried out for the HNB by the Ipsos agency from 23 February 2021 to 1 March 2021.

Nineteen percent of citizens are against the adoption of the euro, while 26% are either against or in favour depending on other factors, and 10% of the respondents do not know, the HNB said.

Also, they said, an increasing number of citizens think that the effect of the euro will be positive. Some of the advantages they see include easier payment and business, as well as the fact that the euro is the common currency in the euro area, which would make Croatia equal to other members of the monetary union.

On the other hand, they see a decline in the standard of living and purchasing power as the main risk, and over a third of citizens think that the adoption of the euro will further increase prices.

To date, the poll has been carried out four times: in August 2018, in February 2019, in March 2020 and in February 2021. The survey is conducted on a nationally representative sample of 1,000 respondents, aged 18 to 79, using computer-assisted telephone interviewing (CATI), and it covers four thematic units: the use of the euro in the Republic of Croatia by foreign citizens, how informed citizens are on the adoption of the euro, citizens' attitudes to the adoption of the euro and their expectations.

The aim of the survey is to determine whether Croatian citizens support the strategic commitment of the government and the HNB to adopting the euro as the official currency in Croatia and whether they are aware of all the benefits that the adoption of the euro will bring to them and the national economy.

For more about business in Croatia, follow TCN's dedicated page.

ZAGREB, 19 March, 2021 - Croatia will enter the euro area on 1 January 2023 at the earliest, and introducing the euro has a number of advantages but for those advantages to be greater the economy needs to be more flexible, including with regard to the labour market, a conference heard on Friday.

The conference, focusing on the introduction of the euro as the official currency in Croatia, was organised by the students' association Financial Club.

Croatian National Bank (HNB) Governor Boris Vujčić said in his opening remarks that Croatia cannot enter the euro zone before 1 January 2023.

"Whether Croatia will enter the euro area on 1 January 2023 or a year or two later, depends on when it will meet the nominal convergence criteria," said Vujčić, recalling that in July 2020, Croatia entered the European Exchange Rate Mechanism II (ERM II), a sort of waiting room for the euro.

He explained that the ERM II envisaged a minimum two years of participation in it so that a candidate aspiring to join the euro area can meet the nominal convergence criteria (Maastricht criteria). On the other hand, if it does not satisfy the criteria, which refer to the stability of the exchange rate, prices and interest rates, the budget deficit and the level of foreign debt, a country can remain in the ERM II indefinitely, Vujčić said.

He recalled a survey indicating that citizens fear that with the introduction of the euro the standard of living will deteriorate and prices will increase. However, surveys in countries that have already introduced the euro indicate that prices increased by 0.23 percentage points on average in the year when the euro was introduced, mostly for everyday goods such as coffee. Prices of such products are relatively lower so their increase could have been relatively high due to rounding off.

"That left the impression in public that prices increased more than they did," explained Vujčić, underscoring that the standard of living did not fall in any country that introduced the euro but rather it improved.

Ćorić: Biggest advantage to companies exporting to euro area

Minister of Economy and Sustainable Development Tomislav Ćorić said that it was clear that citizens would not start living better on the first day of introducing the euro, however, what points to better prospects was the fact that the macro environment in the euro area was free of risks that non-member countries were faced with.

The risk premium in all countries that entered the euro area has dropped, said Ćorić, noting that that was something that in normal circumstances should  bring benefits to Croatia, such as reducing yields on long-term security instruments and lower interest rates on commercial and consumer loans.

Considering, however, that we live in "fairly radical economic times," and a period of very low interest rates, the effects which countries that entered the euro area some ten years ago had would be somewhat lower, however, they would still be significant, he said.

The advantages are potentially biggest for export-oriented companies considering that the exchange rate risk will be eliminated, he said.

Ćorić said that the project for euro introduction was not an end in itself but was primarily a very good tool for Croatia's long-term economic growth and development.

Mačkić: Flexibility of labour market, final goods and services market

President Zoran Milanovic's economic adviser, Velibor Mačkić, conveyed the president's message saying that it was necessary to discuss the benefits and potential harm of Croatia joining the euro area.

Mačkić believes that Croatia has not developed its own institutions sufficiently and that that poses a problem. "The country needs a different economy, a much more flexible economy, to be able to benefit more significantly from the monetary union," said Mačkić.

He added that the labour market and the market of final products and services need to be more flexible.

Mačkić underlined the importance of an efficient fiscal policy and of the reform of the tax system which Mačkić believes needs to change from "a consumption-based to income-based tax system."

For more about business in Croatia, follow TCN's dedicated page.

August 30, 2020 – Should Croatia join the Euro? No, says Nobel prize-winning economist. And Coronavirus is exactly why.

Should Croatia join the Euro? To be honest, we thought this had already been decided upon. But, new comments made by Nobel prize-winning economist Joseph Stiglitz on Saturday 29 August open the question again within the new perspective of the Coronavirus era.

We say new comments, but that's not exactly true. Stiglitz, who won the Nobel prize for economics in 2001, has long been an opponent of the Euro. He is of the opinion that joining the single currency removes a country's ability to respond to crises. While it is true that joining the single currency removes a country's ability to change the exchange rate and deprives it of monetary policy, and thus of changing interest rates, the rub is that Euro countries get more favourable loan deals.

On 10th July 2020, Croatia and Bulgaria joined the European Exchange Rate Mechanism (ERM II), a necessary step in joining the Euro. Both must spend at least two years in ERM II before joining the single currency. Croatia will be eligible to adopt the Euro in January 2023. But what will be the situation with Coronavirus and its economic fallout at that time? Should Croatia join the Euro?

The Euro is the currency for only 19 of the 27 countries in the EU. Some EU countries, such as Sweden and formerly the UK, have flatly refused to introduce the Euro despite many years of EU membership, believing that having a national currency is absolutely necessary to manage economic policy.

"I think that every country that retains its flexibility is well advised," said Stiglitz, in an online exchange during this year's Alpbach European Forum. Stiglitz, a former World Bank chief economist and former economic adviser to US President Bill Clinton, is of the opinion that grants available to EU member states should instead be used to deal with times of crises, rather than cheaper loans facilitated by being a member of the single currency.

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ZAGREB, August 28, 2020 - The European Central Bank and the Croatian National Bank (HNB) have agreed to extend a euro liquidity line by six months until the end of June 2021, the HNB said on Friday.

The ECB and the HNB established a currency swap in April under which the HNB can borrow up to €2 billion from the ECB in exchange for Croatian kuna.

The swap was agreed to, to provide euro liquidity to Croatian financial institutions to address possible euro liquidity needs in the presence of market dysfunctions due to the COVID-19 shock. The euro liquidity line had been agreed initially until the end of 2020.

The maximum maturity for each drawing is three months.

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