“If we Bring in the Euro, Croatian National Bank Loses All Authority”

Total Croatia News

The head of Croatian exporters and Končar Management President Darinko Bago believes the expedited introduction of Euro won’t happen and that such a move must be seriously analyzed before any decision

After foreign media began writing of the European Commission considering to introduce the Euro to EU members not using it yet, questions arose what such an intervention would mean for Croatia and its citizens, Tportal.hr reported on June 2, 2016.

Denmark, Sweden, Bulgaria, Croatia, Czech Republic, Poland, Hungary and Romania might find themselves before an ultimatum set by European Commission chief Jean-Claude Juncker, who after Brexit wants to make a better connection of member nations through the joint currency in order to elevate it to a monetary union level.

“An emergency introduction of the Euro might have short term positive results, but the question is at what currency rate would be transfer to the Euro. In long term, due to our weaknesses and misbalances, this problem must be studied well as with the introduction of the Euro, the Croatian National Bank loses all attributes of a monetary power it has today,” Bago said.

He does not believe that Juncker’s plan for the Euro should become reality, as that requires changing criteria which EU members must meet. Four of the five criteria we can relatively easily match, but the public debt is a huge obstacle.

“I doubt the criteria for entry to eurozone will change,” he noted.

As far as the currency rate used when transferring to Euro, Bago says that nations entering the monetary union devalued their currency by a few percent to give themselves a reserve for unpredicted situations.

“The Kuna to Euro rate is not realistic, but we are aware that a one-sided change in the rate wouldn’t do much good unless followed by a line of measures,” he concluded. Croatian exporters have been objecting for years to the Croatian National Bank for keeping the level at 7.5 Kuna per Euro. They consider the Kuna too strong and are in favour of devaluing it to make more money on export.


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