Ten years after becoming a member of the European Union, as of 1 January 2023, Croatia will become a member of the euro area – the single monetary area of the second strongest currency in the world. The euro is going to become Croatian money - our money. By introducing the euro, Croatia will have fulfilled the strategic goal that gives full meaning to our membership in the European Union - the euro is coming to us for a better and safer life for our citizens, for Croatian economic growth.
The aim of the introduction of a common currency was to deepen the connection between the Member States and facilitate the exploitation of all the advantages of the single market, with the free movement of people, goods, services, and capital. The euro removes transaction costs, it settles inter-currency changes within the euro area, and, for euro area members who largely trade with other euro area members, it reduces exposure to currency risk, facilitates trade and increases the resilience of economies to crises. Overall, the euro contributes to more stable economic opportunities and growth, greater investment and new jobs. The European Economic and Monetary Union (EMU), with the euro as its common currency, was established on the basis of three phases.
In the first phase, the freedom of capital movement within the EU was established, cooperation between national central banks was strengthened, and the degree of coordination in the area of fiscal policy was also increased.
The most important activities in the second phase were the establishment of the European Monetary Institute, which later became the European Central Bank (ECB), and the strengthening of the institutional independence of central banks. In addition to this, at this stage, the Member States focused on the prudent conduct of economic policy in order to improve their macroeconomic indicators, and thus meet the criteria for the introduction of the euro. The introduction of the euro as a unit of account in 1999 marked the beginning of the third, final phase of the establishment of the EMU. The currencies of the Member States were then irreversibly fixed in relation to the euro, the authority to conduct a common monetary policy was assigned to the ECB, and three years later euro banknotes and coins entered circulation.
The euro is the common currency of 19 EU Member States and one of the main symbols of European integration. As a unit of account, the euro was introduced on 1 January 1999, initially in 11 countries. Three years later, on 1 January 2002, euro banknotes and coins entered circulation in 12 EU Member States, namely: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain (in Greece, the euro was not introduced in 1999 as a unit of account because Greece did not meet the convergence criteria then, but it did in the meantime). Since then, the euro has been introduced in seven more Member States – Slovenia (1 January 2007), Cyprus (1 January 2008), Malta (1 January 2008), Slovakia (1 January 2009), Estonia (1 January 2011), Latvia (1 January 2014) and Lithuania (1 January 2015). On 1 January 2023, Croatia will become the twentieth Member State of the euro area.
CROATIAN NATIONAL BANK
