The introduction of the euro will contribute to strengthening the competitiveness of the Croatian economy and it is necessary to implement it as soon as possible. However, it is essential to carry out structural reforms beforehand, concluded the lecture held on Monday at the Faculty of Economics by the Governor of the Croatian National Bank, Boris Vujčić.
Croatia committed to the introduction of the euro upon entering the European Union, but the strategic document of the Croatian Government and the CNB does not currently mention any dates when this could happen.
As the greatest benefits, the governor highlighted the elimination of currency risk (Croatia has a higher level of risk than eurozone countries), a reduction in interest rates, encouragement of international exchange and investment, and access to financial assistance mechanisms. Such mechanisms, for example, currently cover two-thirds of Greece’s debt, with a maturity of up to 32 years.
>>>Vujčić emphasized ‘significant and lasting benefits’ of the introduction of the euro
Vujčić specifically noted the positive effects of the introduction of the euro on tourism (transaction and payment costs are decreasing), considering that as much as 70 percent of total tourism revenue comes from the euro area.
He described the costs as one-time and small, which include the loss of independent monetary policy, price increases, and the costs of conversion itself. The price increase, as the main reason for public concern, the governor described as a myth and added that we can expect an increase of about 0.23 percent, more pronounced in the area of services and smaller products.
During his presentation, he also described the process that lies ahead for Croatia, which consists of entering the exchange rate mechanism (ERM II), meeting the criteria (interest rates, exchange rate, inflation rate), and increasing labor productivity for which it is essential to carry out structural reforms – effective tax and administrative relief, reform of the judiciary and education system, increasing the efficiency of the public sector, better management of state assets, sustainability of the pension and health systems, and increasing the use of European Union funds.
