Croatia is becoming the twentieth country to use the euro in a major milestone for a nation of four million people that has long strived for closer integration with the rest of the EU.
Croatia’s currency, the kuna, has used the euro (and prior to that one of the euro’s major predecessors, the German mark or Deutsche Mark) as its main reference since its creation in 1994. A long-held policy of the Croatian National Bank has been to keep the kuna’s exchange rate with the euro within a relatively stable range.
In order to adopt the euro, a country had to fulfill a set of economic conditions, including having a stable exchange rate and low inflation.
By adopting the euro, the eastern European nation hopes to gain more financial security and improve the living standards of its citizens.
It will also be a symbolic boost for European unity just as Russia is trying to disrupt the bloc’s opposition to its war in Ukraine, the Financial Times notes.
European Central Bank President Christine Lagarde called the addition “a vote of confidence for the euro area” and said Croatia would benefit from the “shield of the euro.”
To improve pricing transparency, shops in Croatia have had to display the cost of goods in both kuna and euro since September and will continue to do so until the end of 2023. Businesses have been threatened with fines it they seek to take advantage of the switch to raise prices.
Croatia also joined the Schengen Area
It has become the 27th nation in the passport-free Schengen zone, the world’s largest, which enables more than 400 million people to move freely around its members.
Croatia’s entry into the Schengen borderless area will also provide a boost to the Adriatic nation’s key tourism industry, which accounts for 20% of its GDP.
Previously long queues at the 73 land border crossings with Slovenia and Hungary will become history.
Border checks will only end on the 26th of March at airports due to technical issues.
After Croatia, 7 EU countries have still to adopt the Euro
As Croatia becomes the twentieth EU nation to adopt the euro, there are still a number of members that haven’t taken this step.
In total, seven EU countries don’t use the euro, including Bulgaria, the Czech Republic, Denmark, Hungary, Poland, Romania, and Sweden. In these countries, visitors from the eurozone still need to exchange money before they travel.