The changeover to the euro is about to start in Croatia!

On 10 September 2021, Croatia signed a memorandum of understanding (MoU) with the European Commission and the member states of the eurozone which details the preparatory steps that will enable Croatia to begin producing euros once the Council of the European Union decides that Croatia can join the eurozone. Following the signing of the stated MoU, Croatia government officials expressed their strong belief that Croatia will be ready to join the eurozone by the targeted date – 1 January 2023 – and that all necessary preconditions will be met.

Croatian National Bank (CNB) shall be eligible to start the production of euro circulation coins with the Croatian national marks at the earliest six months before the introduction of the euro, that is after the EU Council Decision that Croatia can introduce the euro. During the first two weeks from the day of the introduction of the euro, kuna and euros will be in circulation at the same time, and retailers should return the change to customers exclusively in euros, according to the CNB. After that period, the euro will be the only legal tender. In other words, citizens of Croatia will be able to pay in both currencies in the first two weeks starting from the day the euro is introduced in stores. After those two weeks from the day of the introduction of the euro, the euro will be the only legal tender in the Republic of Croatia.

Nevertheless, before Croatia adopts the euro as its official currency, it must first meet all convergence criteria, which are known as the "Maastricht criteria". There are four convergence criteria, where, at this point, Croatia meets two of them: price stability and long-term interest rates. Two other criteria that Croatia is yet to meet are the criterion of sound public finance and exchange-rate stability. Croatia is expected to, by the end of 2021, overcome the negative impact of the Covid-19 pandemic on the Croatian economy, and therefore again meet the criterion of sound and sustainable public finances. Furthermore, to fulfill the second criterion - the exchange-rate stability – Croatia must participate in the exchange rate mechanism (ERM II) for at least two years without severe tensions, in particular without devaluing the euro. Since kuna has been included in the ERM II as of 10 July 2020, two years period expires in mid-2022, therefore 1 January 2023 is an achievable and realistic date for introducing the euro as Croatia's official currency.