ZAGREB, January 8, 2019 – The European Commission Vice President responsible for the Euro and Social Dialogue, Valdis Domobrovskis, said on Tuesday that Croatia was working hard on the introduction of euro as its official currency, and that the process of Croatia’s admission to the 19-strong euro area would be similar to the process involving Bulgaria that had already sent a letter of intent.
Croatia is working seriously and intensively to create the prerequisites for its admission to the euro area, Latvian Dombrovkis told the press on Tuesday in Riga on the margins of a conference on Latvia’s five years in the euro area.
In 2019, Latvia is celebrating five years in the euro area, and it will also be twenty years since the European citizens can pay in euros.
The two-day conference in the Latvian capital city was organised by the European Commission. Dombrovskis recalled that the expansion of the euro area was an open procedure based on rules, and that all EU member-states, except Denmark and Great Britain, were obliged to introduce the euro as their official currency. There are no deadlines for the obligatory adoption of the euro as the sole legal tender in an EU member-state.
The European Commission supports member-states’ efforts to introduce the euro, and provides not only political but also the necessary technical and financial support, the Commissioner said.
He said that the next financial perspective would also include a programme of financial support to the reforms carried out by EU member states aspiring to join the euro area membership.
Croatia and Bulgaria have expressed their intention to join the euro area five years after the last round of its expansion.
Aspirants are expected to enter the European Exchange Rate Mechanism II (ERM II) as well as the Single Supervisory Mechanism (SSM). The SSM, which refers to the system of banking supervision in Europe, comprises the European Central Bank and the national supervisory authorities of the participating countries.
The ECB thus can supervise local financial institutions and the process implies the implementation of legislative, operative and technical preparations, all of which takes time.
Croatia will likely enter the ERM II during 2020, a year after the submission of its letter of intent.
Bulgaria, which in 2018 sent a letter to the ECB and other European institutions about its plan to join the ERM II, will probably enter the ERM II in mid-2019, according to Dombrovskis.
After that, it will take at least three years for Bulgaria to adopt the euro provided that Sofia meets all the criteria: two years in the Exchange Rate Mechanism and a minimum one year for the evaluation of the aspirant’s achievements and for practical preparations for the replacement of its currency lev with the euro.
More news on the Croatian monetary policy can be found in our Business section.