One of the most important goals of the Croatian government is full integration into the European Union, meaning amongst other points the introduction of the Euro as the official currency. A goal has been set to bring in the Euro and kick out the Kuna by 2022.
And according to a new report by the European Commission to fully join the euro zone Croatia fulfils all the criteria but one. To be a part of the euro zone and to bring in the Euro a member state must be a part of the Exchange Rate Mechanism for a minimum of two years. Croatia has yet to fulfil this last step.
The report included seven countries which, upon joining the EU, have taken on the obligation of introducing the euro as official currency: Bulgaria, The Czech Republic, Croatia, Hungary, Poland, Romania, and Sweden. The report said the countries in general showed high nominal convergence, but none of them fulfilled all the formal criteria for joining the euro zone. Two countries, Croatia and Bulgaria, fulfil all the convergence criteria apart from taking part in ERM, said a press release from the European Commission.
The Exchange Rate Mechanism is basically a system that ensures that fluctuations between the euro and the currency of an individual state, in this case the Kuna, do not disrupt the financial situation inside the single market.
Only Croatia, of the countries included in the report, has brought its legislation completely in line with the regulations set by the European Monetary Union, the release said.