European Union finance ministers on Tuesday (July 12) formally approved Croatia becoming the 20th member of the euro common currency at the start of 2023.
The European Council, the grouping of 27 EU governments, adopted three legal acts required to allow Croatia – an EU member since 2013 – to introduce the euro on January 1.
One of those acts set the conversion rate for entry at one euro to 7.53450 Croatian kuna, with Croatia now having a few months to prepare the practicalities for the currency switch.
European Commission Vice-President Valdis Dombrovskis said the use of the European currency would bring economic benefits to Croatia – the first country to join the euro since Lithuania in 2015.
“It will help stabilize interest rates, making it easier and cheaper for people and companies to borrow and it brings a positive impact on growth thanks to the full integration into EU single market,” he said.
To adopt the euro, Croatia had to fulfil criteria of price and exchange rate stability, sound public finances and moderate long-term interest rates, all measured against EU benchmarks.
“I know that it’s a wonderful club to be a member of but it requires commitment, dedication, continued respect of the rules,” European Central Bank President Christine Lagarde said at a signing ceremony.
The European Commission examined Croatia’s economic convergence with the rest of the euro zone, including balance of payments trends and the integration of its labour and financial markets, and verified that Croatian legislation is compatible with EU laws governing the European Central Bank.
Croatia, in southeastern Europe, has been an independent country since 1991 when it left then-federal Yugoslavia. Neighbouring Slovenia, also an ex-Yugoslav republic and now EU member, adopted the euro in 2007.