Maastricht criteria
Currency changeover process

Benefits of introducing euro


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 MoU, Andrej Plenković, prime minister, and Boris Vujčić, governor of the Croatian National Bank, 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.

Signing the MoU is yet another significant and practical step in Croatia's efforts to join the eurozone by 1 January 2023 and sends a clear message – namely, that the European Commission continues to support Croatia in its preparations and efforts to join the eurozone.

Maastricht criteria

Before it can adopt the euro as its official currency, Croatia must first meet all convergence criteria, which are known as the "Maastricht criteria".

Currently, Croatia meets two out of four Maastricht criteria:

  • price stability; and
  • long-term interest rates.

However, due to the negative impact of the covid-19 pandemic on the Croatian economy, Croatia does not currently meet the criterion of sound and sustainable public finances. Nevertheless, considering the macroeconomic projections and the expected significant increase in real gross domestic product, Croatia is expected to meet this criterion again by the end of 2021.

Furthermore, Croatia is yet to fulfil the exchange-rate stability criterion. To do so, Croatia must participate for at least two years in the exchange rate mechanism (ERM II), without strong deviations from the ERM II central rate and without devaluing the kuna's bilateral central rate against the euro in the same period. Croatian kuna has been included in the ERM II as of 10 July 2020 (for further details, please see "Croatia reaches major milestone for admission into eurozone").

Since Croatia's two-year period of participation in the ERM II expires in mid-2022, 1 January 2023 is an achievable and realistic date for introducing the euro as Croatia's official currency.

Currency changeover process

In December 2020, prior to signing the MoU, the government adopted the National Euro Changeover Plan, which outlines legislative, administrative and logistical activities necessary for the efficient and successful changeover to the euro.

Introducing the euro will require significant legislative activity – namely, the adoption of a general act governing the introduction of the euro and amendments to a number of acts and subordinate legislation regulating:

  • the payment system;
  • the tax system;
  • the capital market;
  • the financial system; and
  • trade law.

The most demanding and complex step will be the conversion process of the Croatian kuna to the euro. About six months before Croatia introduces the euro, the Council of the European Union will adopt a decision on the introduction of the euro, setting an irrevocable conversion rate between the kuna and the euro (a fixed conversion rate). It is expected that €1 will equal 7.53450 kuna. The conversion from the kuna to the euro will be performed using all five decimals and then rounding the amount obtained to two decimal places. The conversion of prices and other monetary values at an exchange rate other than the fixed conversion rate shall not be permitted. The conversion process, at the date of the introduction of the euro, will be as follows:

  • Kuna assets in current, giro, savings and other accounts with banks will be automatically converted at the fixed conversion rate.
  • Kuna loans and loans with a currency clause in euros will be automatically converted into loans in euros at the fixed conversion rate and free of charge for the borrower.
  • For shares, bonds, units in investment and pension funds, and all other capital and money market instruments, the conversion, for which the fixed conversion rate will be used, will be carried out in accordance with the decision of the securities' issuer. The decision can be rendered at the earliest on the date that the Council of the European Union sets the fixed conversion rate and the conversion is obligatory within a year from the date of introduction of the euro.
  • In the first six months after the date of introduction of the euro, banks will exchange cash free of charge. Afterwards, a handling fee will be charged.

Benefits of introducing euro

The introduction of the euro will bring significant changes to the Croatian economy and entrepreneurs. However, the overall effect should be positive. The fear of the decline in standards and purchasing power and of the significant increase in prices remains the main concern for Croatian citizens and the cause of the reluctance towards the introduction of the euro. Nevertheless, recent polls show that around 60% of Croatian citizens support the introduction of the euro.

Generally, the Croatian economy should become more competitive and resilient. Entering the eurozone is also expected to boost foreign investment. The currency risk to which all those who have euro-related loans are exposed will be eliminated and lower interest rates are to be expected, therefore bringing more favourable financing conditions for both Croatian citizens and entrepreneurs. Also, since Croatia has a high level of foreign currency debt, the introduction of the euro will be beneficial for the state itself. Additionally, transaction costs will disappear, which will be especially beneficial to Croatian exporters.

For further information on this topic please contact Ivana Manovelo at Maćešić & Partners by telephone (+385 51 215 010) or email ([email protected]). The Maćešić & Partners website can be accessed at