EU leaders endorse Croatia’s entry into euro area

NEWS 24.06.2022 17:39
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Source: Olivier HOSLET / POOL / AFP

The European Council on Friday endorsed Croatia's entry into the euro area on January 1 next year.

“Today, at the European Council, Croatia received support from the highest political level for membership in the euro area. On January 1, we will achieve the Croatian government’s strategic goal of joining the euro area. The benefits of membership will be felt by Croatian citizens and the economy, which will be even more resilient to crises,” Prime Minister Andrej Plenkovic said on his Twitter account.

“The euro is the monetary expression of our shared destiny and has been part of our European dream. Now the dream comes true for Croatia,” European Council President Charles Michel tweeted.

EU leaders supported the recommendation on Croatia’s entry into the euro area on Friday. This is the second-to-last step in the decision-making process. The last step will be the adoption of three legislative proposals on Croatia’s entry, which will take place at a meeting of the Economic and Financial Affairs Council on July 12, and on January 1 next year, the euro will become the official currency in Croatia.

Croatia will be the 20th member of the euro area. It will be the first enlargement of the euro area since 2015 when Lithuania joined.

Alongside Slovenia, Croatia is the country that spent the least time in the euro waiting room, the European Exchange Rate Mechanism – the minimal two years, while Lithuania, for example, spent 11 years, and Latvia nine years in the ERM II.

When first introduced in 1999, the euro was the so-called book currency, and the euro area consisted of 11 of the then 15 EU member states. Greece joined in 2001, just a year before the euro was physically introduced, followed by Slovenia in 2007, Cyprus and Malta in 2008, Slovakia in 2009, Estonia in 2011, Latvia in 2014 and Lithuania in 2015.

By adopting the euro as its legal tender, Croatia joins the Eurosystem, which consists of the European Central Bank and the central banks of the euro area member states, and the Governor of the Croatian Central Bank joins the Governing Council of the European Central Bank. The Minister of Finance participates in Eurogroup meetings and the Prime Minister in eurozone summits.

Croatia also automatically becomes a member of the banking union, the banking supervision and resolution system.

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