Euro Hopeful Croatia Sets Sights on Adoption as Early as 2023

(Bloomberg) --

Croatia may introduce the European Union's common currency as early as January 2023, central bank Governor Boris Vujcic told Zagreb-based newspaper Vecernji List a day after the country sent a letter of intent to join the euro-area's waiting room, known as ERM-2.

“This is under a presumption that Croatia by then satisfies the nominal criteria of convergence,” Vujcic said in the interview published Friday. “There are no defined dates yet, we must go step by step.” The country may meet conditions to join ERM-2 by the middle of next year and could make the currency switch “at least two years” later.

Beside the newest EU member, Bulgaria and Romania are also seeking to adopt the euro. They would follow other former communist countries Estonia, Latvia, Lithuania, Slovakia and Slovenia, which have already fulfilled the pledge to ditch their national currencies that they made when joining the trading bloc in 2004. Of the EU's largest eastern members, Hungary, Poland and the Czech Republic have no immediate plans join the euro zone despite being bound by EU law to eventually do so.

In another step on the road to euro, Croatia in May asked the European Central Bank to set up closer cooperation with the country's monetary-policy regulator in the supervision of commercial banks. The so-called Single Supervisory Mechanism is a key part of the procedure to enter ERM-2.

Read more about the obstacles facing euro hopefuls

With about 80% of deposits in euros, the Croatian economy is already the most reliant on the currency of all the members that haven't formally adopted it. Vujcic has repeatedly argued that the kuna being already pegged to the euro means that there would be little cost in terms of monetary-policy sovereignty.

To contact the reporter on this story: Jasmina Kuzmanovic in Zagreb at jkuzmanovic@bloomberg.net

To contact the editors responsible for this story: Andrea Dudik at adudik@bloomberg.net, Balazs Penz, Andras Gergely

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