Croatia faces the task of meeting the Maastricht criteria, after a remarkable job was done in the past year leading up to its entry into ERM II, it was emphasized on Monday after the sixth session of the National Council for the Introduction of the Euro as the Official Currency in the Republic of Croatia.
The European Central Bank (ECB) and the European Commission (EC) announced on Friday that Croatia has entered the European Exchange Rate Mechanism (ERM II), which is a crucial step in the process of introducing the euro in Croatia, and the Croatian National Bank has established close cooperation with the European Central Bank.
Deputy Prime Minister and Minister of Finance Zdravko Marić informed journalists in front of the Government Palace that the council meeting for the introduction of the euro discussed the achievements in the year leading up to the entry into ERM II. He assesses that everyone has done a great job, and believes that the congratulations from practically all leaders of European institutions that followed after Friday are proof of this, along with the expressed readiness for further dialogue and cooperation to implement this ‘important step’ within the timelines that align with some expectations.
Marić reminds that Croatia will spend at least two years in ERM II, and after that, especially upon meeting the criteria of nominal convergence, that is, the ‘Maastricht criteria’, the formal introduction of the euro is expected.
– However, this is a long enough period for all of us to prepare as well as possible, to meet those measures, so that the positive effects of introducing the euro are even more positive and greater, and that any potential problems or costs are minimized – said Marić.
When asked by journalists whether he expects a certain easing of the rules for joining the eurozone due to circumstances, Marić says that there are very measurable and clear quantitative criteria, and the experiences of Lithuania and Latvia, which did not meet them, show why their stay in ERM II was the longest. In the period ahead of us, there is practically no more political decision, but the decision relates to meeting the criteria, explains Marić, and whether there will be a correction of those criteria – ‘we will see about that later’.
The Maastricht criteria relate to exchange rate stability, price stability, interest rate stability, along with two important indicators concerning public finances – budget deficit and public debt.
Marić notes that fiscal rules are currently not a priority for any member state, their temporary suspension and deferral have been voted, but he also states that Croatia will strive to return to the planned fiscal criteria next year, in terms of a budget deficit within three percent and a downward trajectory of public debt.
Vujčić Announced the Adoption of a National Plan for the Replacement of the Kuna with the Euro in Autumn
The Governor of the Croatian National Bank (HNB) Boris Vujčić assesses that Croatia is in a good position to continue pre-crisis macroeconomic policies, as it has already met the Maastricht criteria. He also states that, considering the problems with the coronavirus pandemic, it is very good that the entry into ERM II has been completed within the expected timeframe.
– If the job had not been completed now, we would have practically lost much more time – said Vujčić.
With Croatia’s entry into ERM II, Vujčić reminds, the HNB has entered into a process of close cooperation with the European Central Bank (ECB), which means that from this autumn, Croatia de facto becomes a member of the banking union, meaning that the ECB, together with the HNB, takes over supervision of Croatian banks.
