January the 12th, 2023 - Eurozone Croatia is now finally a reality, and while the country grapples with the new currency, price hikes and attempts to get rid of kuna left in sock drawers and under mattresses, one Zagreb cafe owner is sick to the back teeth of being paid in mountains of lipa coins for coffee.

Many people thought they were prepared for the birth of Eurozone Croatia, but it seems as if most of us have forgotten the unholy amounts of rather pointless lipa coins we all have lying around at home, in jacket pockets and more than likely under the living room rug. These tiny golden coins which have more or less always been somewhat good for nothing are now an even bigger thorn in the side than they were when the kuna was the official currency. Cafe owners are now being bombarded with them.

As Poslovni Dnevnik/Zvonimir Varga writes, there are only a few days left during which people can continue to pay for items and services in kuna and lipa, and some people are using the opportunity to get rid of excess coins while it lasts.

While banks and other financial institutions are happy to transfer small denominations such as lipa into a bank account without any major problems, cafe owners are faced with a bigger problem. Some people have decided to make the recent cafe-based nightmare of ''becoming an unwilling exchange office'' come true leave all of their lipa change on their tables. As previously mentioned, even when the kuna was the country's official tender, nobody was a fan of lipa coins, people are even less of a fan now that the kuna is set to enter the history books entirely.

To make matters worse for cafe owners and staff, some people simply leave their money on the table and leave after having a coffee, and one Zagreb cafe owner from the Jarun lake area has had more than enough of having lipa coins thrown at him.

After finishing their drinks, one couple left a pile of kuna, lipa and even equally annoying euro cents on their table and left while the waiter was busy doing something else. The staff of the cafe were not even that annoyed by the fact that they ended up being paid like that as such, but by the fact that the couple left the coins in this way and got up and left.

"What kind of people are they, it looks like they ran away" asked one of the waiters, while another concluded: "This way of paying is shameful!".

For more on Eurozone Croatia, make sure to keep up with our news section.

December the 17th, 2022 - With Croatian Eurozone accession now less than one month away, just how long will Croatian gift cards expressed in kuna, soon to be an invalid currency, remain valid following the introduction of the euro?

As Poslovni Dnevnik writes, N1 recently looked into a reader's inquiry about the validity of Croatian gift cards expressed in kuna, which will be scrapped as legal tender of January 2023. In several large retail chains operating across the country, the situation with Croatian gift cards whose value is expressed in kuna has been clarified.

People are busy collecting all of the many coins they still have lying around the house, in old trouser and jacket pockets and under sofa cushions, others are trying to locate that old sock with a few balled up notes in it to be deposited into their bank accounts before Croatia switches to the euro. Many forgot about gift cards, and some have been worried about the deadline in which they have to spend the amount expressed in what will soon be the old currency on those Croatian gift cards. Retailers have stated that there is nothing to worry about and that everyone will have plenty of time to spend them.

"The Konzum gift card, for example, will be able to continue to be used after January the 1st, 2023, and the remaining amount on the card will automatically be converted into euros," Konzum stated.

The situation is similar in the case of gift cards issued in kuna by Lidl.

"The deadline for using the amount on Lidl gift cards is three whole years. All Croatian gift cards on which employers have paid out Christmas bonuses to their employees in kuna, as well as kuna gift cards that customers will be able to buy in Lidl until the end of the year, will simply be converted into euros as of January the 1st, 2023, so customers will be able to use them to make legal payments in Lidl stores even after the introduction of the euro as Croatia's official currency," Lidl explained.

For more, check out our dedicated news section.

October the 6th, 2022 - Brand new Croatian euro coins will be made available for both people and business entities to purchase as of the 1st of December, 2022 as official Croatian Eurozone accession is set to occur on the 1st of January, 2023.

As Poslovni Dnevnik writes, approximately 420 million Croatian euro coins with national motifs weighing as much as 3.7 tonnes are currently being produced, and they will be offered to all people and business entities from December the 1st, 2022.

The one euro coin features the image of a wood marten, which is an animal similar to a ferret or mink and which is the name of the current Croatian currency (the kuna), the two-euro coin is decorated with a geographical map of the Republic of Croatia, the 50, 20, and 10 euro cent coins feature the image of Nikola Tesla, while the 5, 2, and 1 euro cent coins feature the letters H (for Hrvatska/Croatia) and R (for Republika/Republic) written in Glagolitic script, the oldest known Slavic alphabet, according to a report from Danica.

The Croatian National Bank (CNB) explained that all of the necessary quantities of Croatian euro coins with the aforementioned features will be minted by December the 1st this year. They will be sorted into 1.2 million packages for people to purchase and 200,000 packages for business entities to purchase.

Therefore, from the very frist day of December this year, people will be able to purchase a maximum of two packages containing 33 different Croatian euro coins worth 13.28 euros at the Croatian National Bank, as well as from branches of Fina and Croatian Post (Hrvatska posta). Each package will cost 100 kuna.

For more on Croatia's upcoming accession to the Eurozone, make sure to keep up with our dedicated politics section.

September the 6th, 2022 - Croatian public procurement issues and disputes will be settled solely in euros when we enter 2023, even if they were initially concluded and contracted in Croatian kuna.

As Poslovni Dnevnik/Marija Brnic writes, on the first day when officially all prices must be expressed in euros in addition to Croatian kuna, many were surprised that in the very recently announced tenders of state and public bodies and institutions, as well as companies, the highest prices willing to be paid for a particular job were not stated in the new currency (euros) at all.

In all contracts on the Electronic Croatian Public Procurement Bulletin, absolutely all the latest offers are displayed exclusively in kuna.

Evaluations carried out in euros

For the private sector, a large fine of up to 100,000 kuna is foreseen for non-compliance with the obligation to properly display prices in both kuna and euros until the end of 2022. What we're seeing with the failure to display prices in both euros and kuna in this sense is (rather surprisingly) nothing to do with the classic sluggishness of Croatian state bureaucracy, but about the use of an opportunity provided by legislation.

The so-called guideline for adjusting Croatian public procurement procedures to the process of replacing the Croatian kuna with the euro, which was prepared in July by the Directorate for Trade and Public Procurement Policy of the Ministry of Economy and Sustainable Development, discussed this in depth. That official document provides details on how the introduction of the euro will be treated in Croatian public procurement procedures, and the starting point is that in public procurement, there is actually no obligation to display prices in both kuna and euros.

This also applies to the preparatory period, which began on July the 15th 2022, as well as the dual pricing circulation period, which began on September the 5th.

Over the past month or two, some legal experts have pointed out to their clients the situation in which they may find themselves when engaged in these procedures, especially in cases where bids are submitted this year and evaluations are due to be performed only in 2023. They advised them to be guided by the official kuna-euro ratio immediately when forming their offers, regardless of whether the tender for a specific job provides for it or not.

As stipulated in the guidelines, in cases where the bids are submitted by December the 31st of this year, and the evaluation is carried out the following year, companies should display their prices in kuna amounts, and the evaluation will be performed in euros. This takes into account the fact that the conversion will take place automatically, at a fixed conversion rate, and in the full amount, not rounded to two decimal places, i.e. in the amount of 7.53450 kuna for one euro.

The guidelines specifically emphasise that the conversion of currencies must not under any circumstances result in an increase in the price or value of goods and services.

Concluded contracts in kuna

In all Croatian public procurement procedures started this year, for which the appeal procedures within the State Commission for the Control of Public Procurement Procedures are set to be resolved after the New Year, and the selected bidder is rejected, the most economically advantageous offer will have to be made solely in euros.

In Croatian public procurement cases initiated this year, but with their bid submission deadlines marked out in 2023, the value of the work will be assessed only in kuna, and the currency will be the euro during the selection process which follows. As far as already concluded contracts are concerned, for all issued purchase orders until the end of this year, invoices will need to be issued in kuna, and after that in euros.

For the executed parts of contracts this year, for which invoices were issued this year, but the company is set to pay it in 2023, they will be carried out in euros. For framework agreements of a longer duration, invoices will be issued in kuna until the end of the year, and thereafter in euros. After the New Year, the only currency for Croatian public procurement procedures of any type will be the euro.

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

August the 29th, 2022 - Croatian Eurozone accession is just around the corner, with all requirements filled, all boxes ticked and the date for entry marked out for the 1st of January, 2023. The public is still divided on the issue, however, so what are some of the advantages and some of the risks and costs of Croatia finally becoming a Eurozone member?

As Poslovni Dnevnik/Marina Marovic writes, here is no alternative to joining the Eurozone for Croatia, as it was part of the referendum the country held on joining the bloc. It did so back in July 2013 and according to experts, all the benefits of Croatian Eurozone accession greatly exceed the potential costs and risks. The Croatian economy has an extremely high degree of euroisation despite still using the kuna as it is tied to the euro, and around 70% of people's savings in Croatia are in the bloc's single currency.

Therefore, kuna devaluation is simply not an option, because the balance effect would be significantly more difficult for the Croatian economy to handle than any gains on the export front.

The biggest advantages of Croatian Eurozone accession

This high rate of Croatian euroisation originates from the time of the former state of Yugoslavia when, due to hyperinflation, the German mark was the currency used to preserve the value of money in the country. This means that regardless of Croatia having its very own currency for less than three decades, this sense of illusory monetary sovereignty will not actually be lost, but the risks involved in everything financial will be greatly reduced.

The absolute biggest advantage of Croatian Eurozone accession on January the 1st, 2023 comes in the form of significantly lower risks and reduced borrowing costs. In addition to the reduction in interest rates, which also maintains a better investment rating, additional borrowing will be made much easier because joining the Eurozone frees up significant funds (about 160 billion kuna in total) currently tied up as minimum foreign currency claims. In addition to that, the country's banks will reduce currency risks and improve overall stability.

In addition to lower interest rates and borrowing costs, Croatia will become more attractive for both investors and tourists (75 percent of them come from the Eurozone, and tourism makes up 20 percent of the nation's economic activity). Additionally, conversion costs for capital transactions such as the sale of property and land, the prices of which have been expressed in euros for a long time now, will be reduced.

Aside from property and other forms of real estate, renting an apartment or buying a car is also usually expressed in euros. By joining the Eurozone, Croatia is merely formalising some of the existing conventions. An additional advantage is that Croatia will be able to count on ECB support in case of any liquidity problems.

Croatian banks will lose out when it comes to conversion fees (about a fifth of their profit, or 1.5 billion kuna), and have additional ATM costs (totalling about 900 million kuna). Exchange offices will largely be out of business. The one-time cost of introducing the euro in Croatia will cost the banks an enormous 100 million kuna, and the cost of the entire adjustment will be paid for by other sectors of the economy, especially retail and telecoms. The average cost for large retail chains will stand at around 30 million euros, for telecoms it is around 20 million euros, and for smaller companies the cost of introducing the euro isn't expected to exceed 10,000 euros.

Uncertain times...

Croatian Eurozone accession is finally occurring in incredibly uncertain times in which it is really difficult to comply with all the requirements for convergence - known as the Maastricht criteria - and yet all the basic indicators were assessed as positive and successful in the latest report and decision back on July the 12th, 2022 The biggest risk is in the galloping rate of inflation.

Back in April 2022, the annual average rate of HICP inflation in Croatia stood at 4.7%, which is below the reference value of 4.9% for the price stability criterion. This value was decisive for the final decision on Eurozone accession in 2023. That said, by the time June rolled around, inflation crossed over into the concerning land of double digits, and the last July value of 12.3% was significantly higher than the average inflation in the Eurozone of 8.6%. The Baltic countries, all of which are now members of the Eurozone, have already registered inflations of more than 20%.

Just joining the euro brings a one-time increase in prices, but on average such an increase amounts to about 0.3% and in the context of current inflation is negligible. The dual display of prices (in both kuna and euros) serves to reduce this risk, and in general, the preparation for the introduction of the euro in Croatia is systematic and thorough, so that these risks are minimal.

In the long term, one would expect convergence of both prices and real income, but in practice there are many other factors that influence whether this actually happens or not. In addition to inflation - foreign exchange markets have experienced tectonic shifts. Croatia is now joining the club of prestigious countries when the euro is at its worst so far - and is at parity with the dollar, which has not happened in the last 20 years. There are several reasons for a strong dollar and a weak euro, but the most important one lies in the fact that the ECB is reluctant to raise interest rates.

The reason for the ECB's lack of reaction is multifaceted, but the fact is that inflation in the EU hasn't been caused by an increase in demand, but rather by an increase in energy and food prices. On the other hand, inflation across the pond in the United States of America is more a consequence of the post-pandemic recovery of the economy than anything else.

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

ZAGREB, 2 March 2022 - The Croatian National Bank (HNB) on Wednesday intervened in the foreign exchange market to preserve the kuna exchange rate, selling €171 million to commercial banks at an average exchange rate of HRK 7.562505 for one euro, the HNB said in a brief statement.

This was the central bank's first foreign exchange intervention since 16 June 2021.

The kuna strengthened against the euro by a marginal 0.0001 per cent from Tuesday.

Today's middle exchange rate, effective from Thursday, is 7.560528 kuna for one euro.

The Croatian financial system is currently enjoying record liquidity of about HRK 80 billion.

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

February 11, 2022 – Considerable controversy has arisen in Croatia this week after artist Stjepan Pranjković was accused of plagiarising a winning proposal for the country's future Euro coin design of the Kuna. 

The graphic designer became the object of public scrutiny when members of the public began pointing out similarities between his composition and a photo of a marten taken by British photographer Iain H Leach. Pranjković has since withdrawn the proposal, leaving officials with the task of selecting a new motif before the coins enter circulation in January of next year.

Squabbling aside, I want to seize this opportunity to draw your attention to the real star of this somewhat dramatic narrative, our fuzzy friend, the kuna.

Many people are familiar with this mischievous forest creature and maybe understand why he lends his name to the national currency. However, if you're like me, you may recognize that gaps remain in your kuna-knowledge. If so, keep reading.

In biologists' speak, kuna (martens) constitute the genus Martes within the family Mustelidae, a group that includes more familiar carnivores like weasels, otters, badgers, and wolverines. There are many species of marten, ranging throughout Europe, Asia, and North America. The star of the current coin debacle is most likely a European pine marten (Martes martes), a common species across Europe, including in Croatia and in Leach's native Great Britain.

The photo in question shows the kuna climbing on a branch. It comes as no surprise then that pine martens are arboreal, spending much of their time maneuvering amongst treetops. These agile predators use their semi-retractable claws to climb between branches, including those of the pines from which they take their name. These claws also come in handy when hunting and foraging their favourite foods: small mammals, birds, insects, fruits, and carrion… delicious! While not most appetizing to the average palate, scientists attribute the appetites of pine martens to a population reduction of the invasive grey squirrel in certain regions across Europe. While many view this fuzzy creature as a pest, this example demonstrates the valuable role pine martens play in their native habitat. Fortunately, despite pressure from deforestation and illegal hunting, the European pine marten is still classified as least concern by the International Union for Conservation of Nature.

So, how did this tree climbing, squirrel eating, weasel cousin end up at the centre of a national debate on currency design? Well, like most things in Croatia, the kuna goes back several centuries and has a complicated but interesting backstory. To understand, we must go back to medieval Croatia, a time when marten pelts were traded as money. Flash to the 13th century, the Croatian Viceroys distributed marten-adorned silver coins called banovac. However, the currency did not last long. As Croatia lost its autonomy to its union with larger and more powerful Hungary, the banovac disappeared in the following century. But this would not be the last time the world would hear the word kuna.

As I'm sure you are all aware, Croatian's are a stubborn and traditionalistic people. (I say this out of love and from personal experience). Thus, it was only natural that upon independence, Croatian leaders designated the kuna as the state currency on May 30, 1994. Ever since, the kuna has served both practically and symbolically as an embodiment of Croatian custom, identity, and national pride.

As is so often the case, it appears that history is set to repeat itself. With the adoption of the Euro imminent, the renaissance of the kuna is coming to an end. I don't want to criticize the government as it moves to bring the country towards a more integrated future. Croatia has much to gain from establishing the Euro within its borders. Nevertheless, by dawning this historical perspective, one can glean additional insight into why so many are hesitant about the process.

For this reason, it truly is a shame that the coin depicting the kuna, a consecrated emblem of Croatian independence, has become ensnared in public dissension. Of course, the choice to withdraw the submission and protect intellectual property was correct. But, personally, I hope that officials can find a way to reincorporate the kuna into the Croatian Euro roster. That way, Croatians can continue to trade furs for beer and wine while sharing this tradition with the rest of the European community.

For more news about Croatia, click here.

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 25th, 2022 - How will Croatian Eurozone accession, which is rapidly approaching and currently due to happen at the very beginning of next year, affect game shows in which prizes are paid out to winners in Croatian kuna?

As Poslovni Dnevnik writes, Croatian Eurozone accession will occur on January the 1st, 2023, and then the euro will replace the kuna as the official currency in this country as well. At that moment, a lot will change, but what interests quiz and game show fans is whether or not the prize money in the popular show "Who wants to be a millionaire?" will increase from one million kuna to one million euros.

Vecernji list finds out that things in that regard are still very much up in the air.

''We haven't totally ruled out the possibility of competitors fighting for a prize of one million euros, but it's more likely that this won't be the case. It will be difficult to plan seven and a half times more funds for the prize fund in the production plan than is the case now. That's a real issue, but it hasn't really been discussed yet.

The originally British "Who wants to be a millionaire?" is also aired on many commercial TV stations in other countries as well, and in those countries, the fund is covered by sponsors. Maybe part of that fund could be covered by sponsors in this country as well.

''There are different options and they are all still being discussed, and when the time comes, we'll have to decide on what our format will look like,'' said Igor Grkovic, the editor of ''Who wants to be a millionaire?" and ''The Chase''.

''We won't have any problems with "The Chase", as the amount of cash offered for the answering of the questions will simply be converted from 3,500 kuna to 500 euros. As for "Who wants to be a millionaire?", we've seen many different examples on how that's done from other countries. Slovenians play for 100,000 euros, and countries such as Slovakia, Estonia, Latvia and Lithuania cancelled their versions of the show before joining the Eurozone. I guess they didn't want it to still be being called "Who wants to be a millionaire?" when the prize isn't a million euros,'' Grkovic said.

It is interesting to compare experiences in other countries. As previously touched on, "Who wants to be a millionaire?" started in the UK back in 1998 and has been broadcast in more than a hundred countries since. Regardless of the name, in some countries, much less than a million is won. For example, in the Albanian and Kosovar versions of the show, the highest prize was 50,000 euros. A new season of the show is being broadcast in Bulgaria, where the main prize is 100 thousand levs, or 385 thousand kuna, and in Greece, as well as in neighbouring Slovenia, the top prize is 100 thousand euros.

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

ZAGREB, 17 Jan 2022 - Prime Minister Andrej Plenković on Monday announced a dual display of prices in Croatia, both in kuna and in euro, from 5 September through the whole of 2023.

Plenković made the announcement at a press conference where he unveiled the bill proposing the adoption of the euro as legal tender in Croatia. He was accompanied by Finance Minister Zdravko Marić, Economy and Sustainable Development Minister Tomislav Ćorić, and Croatian National Bank (HNB) Governor Boris Vujčić.

The bill was put to public consultation today and the final proposal is expected to be sent to Parliament for a second reading in the second half of April.

The bill regulates the legal framework, the cash exchange, supplying all legal entities with euro, the loan and deposit conversion, and consumer protection from undue price increases.

Prices will be displayed in both kuna and euro as of 5 September to raise awareness of the euro even before its adoption, for which the target date has been set at 1 January 2023. The dual display of prices will continue throughout 2023.

Plenković said that citizens will be able to exchange kuna for euro at no cost to them at banks, the Croatian Post, and the Financial Agency (Fina) throughout next year, after which they will be able to do so at the Croatian National Bank free of charge too. He called on citizens to deposit any cash they have in banks so that the conversion can be done automatically.

The PM said that the aim is to ensure a smooth switch to the euro and the effective functioning of the economy.

He noted that this year the government would send to Parliament more than 70 proposals concerning the adoption of the euro, including the physical replacement of the national currency with the euro.

Plenković said that Croatia aspired to integrate with the European Union more deeply by joining the Schengen passport-free travel area and the euro area, and in that regard, relevant decisions would be made in the coming months.

He spoke of the steps that had been taken so far regarding the euro adoption and the reasons why Croatia wanted to join the euro area. He said that the Croatian economy is highly euroized, that 70 percent of tourism revenues come from citizens of euro-area countries, 60 percent of trade is generated with those countries, 70 percent of time savings deposits and nearly 60 percent of household and corporate loans are in euro or indexed to the euro.

Plenković said that the goal of euro area membership was included in government activities 20 years ago.

"What will be happening this year will be the culmination of the processes that have been systematically worked on in the last two decades," the prime minister said, announcing that the Council for Euro Adoption would meet before a cabinet meeting on Thursday.

For more, check out our dedicated politics section.