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This Sunday, January 1, Croatia said goodbye to its national currency and adopted the single currency of the European Union (EU), the euro. The country also adhered to the Schengen area of free movement. These steps mark a major turning point for this small Balkan state, which joined the EU almost a decade ago and was still at war 30 years ago.
At midnight local time Saturday, Croatia abandoned its currency, the kuna, introduced in 1994, and became the 20th member of the Eurozone.
The country also became the 27th State to integrate the Schengen area, a unique area where internal borders can be crossed freely, without passports or controls.
“It is a time of new beginnings and that is the case in Croatia more than anywhere else in Europe,” said the head of the European Commission, Ursula von der Leyen, on her Twitter account after her arrival in Croatia to celebrate the event.
Delighted to have coffee with @AndrejPlenkovic in Zagreb – and what a nice memory, paying with euros for the very first time!
I know that many Croatians will also remember when they held their first euro coins minted with the kuna.
Welcome to the euro community, Croatia ?? pic.twitter.com/4vq0CDDPfy
— Ursula von der Leyen (@vonderleyen) January 1, 2023
“Protect the Croatian economy”
For many experts, the currency exchange will help protect the Croatian economy against rampant inflation, a severe energy crisis and geopolitical insecurity since the Russian invasion of Ukraine last February.
Croatian leaders regularly insist on the benefits that, in their opinion, the country’s 3.9 million inhabitants will obtain from the switch to the euro and entry into the Schengen area.
“If there are moments that we can call historic, that we have the special honor to witness, contributing to the achievement of the country’s strategic goals, then this day is one of them,” Croatian Prime Minister Andrej Plenković said on Sunday.
Povijesni dan za Hrvatsku!
Prva smo država koja u #Schengen Yo #Eurozone ulazi na isti dan. Već danas automobili prolaze bez formalnosti i kontrola, a uvođenjem eura naši građani i gospodarstvo bit će zaštićeniji od kriza.
???? pic.twitter.com/HnPYZuol45— Andrej Plenkovic (@AndrejPlenkovic) January 1, 2023
Eastern European countries such as Poland and Hungary, which are members of the EU but have not opted for the euro, have been even more vulnerable to inflation than the rest of the Eurozone countries.
In November, inflation reached 13.5% in Croatia, compared to 10% in the euro zone. On the other hand, experts also cite the elimination of exchange risks and better loan conditions as advantages for Croats to adopt the European currency.
“Nothing changes on January 1st”
But not all Croats share the enthusiasm of their leaders. Some have doubts: while the end of border controls is generally welcomed, the currency exchange inspires mistrust.
In recent days, customers have lined up at banks and ATMs to withdraw money, fearing liquidity problems after the change.
At the same time, many Croats fear that the introduction of the euro will cause prices to rise. “It’s going to be difficult, prices are already high and they’re going to rise again,” Ivana Toncic, a teacher in Zagreb, told AFP.
But for Marko Pavic, an employee of a tourism agency, “Croatia is entering an elite club. And “nothing changes on January 1, anyway, everything has been calculated in euros for two decades,” adds Neven Banic, another employee.
In Croatia, around 80% of bank deposits were already denominated in euros as the country’s main partners are in the euro zone and tourism, which accounts for 20% of its GDP, is mainly European.
with AFP
