In an interview with BTA during the Annual Meetings of the International Monetary Fund (IMF) and World Bank Group, Croatian National Bank Governor Boris Vujcic said Croatia got what it expected from adopting the euro.
The first major benefit was the elimination of exchange rate risk.
Before joining the euro area, the Croatian economy was highly “euroized” – many people held deposits in euro, continuing the tradition from the past when deposits were in Deutsche Marks. Banks, meanwhile, extended loans in the local currency, but these were indexed to the euro, so that any depreciation of the national currency made loan repayment more difficult for companies and individuals. Eliminating that risk through euro adoption ultimately contributed to an improvement in Croatia’s credit rating, which in turn reduced the cost of servicing the country’s debt, explained Vujcic, who has headed the central bank since 2012.
Another major benefit is the elimination of currency conversion costs in transactions with Croatia’s trading partners, most of which are euro area members. The tourism industry has also benefited from the introduction of the single currency, enhancing Croatia’s attractiveness for visitors from euro area countries and making business easier.
According to Vujcic, euro adoption had a limited inflationary effect – studies by the Croatian National Bank, Eurostat and the European Central Bank (ECB) show that it accelerated inflation by just 0.2 to 0.4 percentage points. In Croatia’s case, the switch to the euro coincided with a period of high overall inflation – the country joined the euro area on January 1, 2023, when inflation had already peaked in November 2022. Inflation has been steadily slowing since then. The recent renewed increase is unrelated to the euro, Vujcic said; it is driven by strong domestic demand, as Croatia’s economic growth rate is three to four times higher than that of the euro area, with faster wage growth and job creation.
The period of high inflation also had a positive side, contributing to a reduction in Croatia’s public debt. In the past four years alone, the debt has fallen from 87% to 57% of GDP, or by 30 percentage points. Inflation boosted budget revenues while not all expenditures were indexed to inflation, meaning they did not rise at the same pace. The most important factor, however, was strong economic growth.
Croatia managed to achieve high growth after the COVID pandemic, like many others, but it also managed to sustain it. This certainly helps reduce the debt-to-GDP. It is very difficult to do that when growth is weak, Vujcic said.
“We have proved that such debt reduction is possible. Now we need to maintain debt below 60% of GDP and a budget deficit under 3%,” he added.
For Croatia, the transition from the national currency to the euro was largely smooth, mainly thanks to thorough preparation. It is crucial that financial institutions, businesses and the public are ready for the change, the central banker said. In anticipation of the new currency, the Croatian National Bank distributed 900,000 starter kits of euro coins; banks managed to load two-thirds of ATMs with euro as early as January 1, and card payments switched immediately to euro. Preparation, Vujcic stressed, is the key challenge.
He said adopting the euro was a good decision. “We have benefited from it, and you will benefit too,” the Croatian central bank governor said.
Croatia as part of the euro area policy
Now as a member of the euro area, Croatia has a seat in the ECB’s decision-making process. The Governing Council consists of the six members of the Executive Board and the governors of the 20 national central banks of the euro area countries (editor’s note: soon to become 21 with the accession of Bulgarian National Bank Governor Dimitar Radev on January 1).
The one person, one vote principle is good for a country like Bulgaria because everyone has the same weight, the Croatian central banker noted.
According to him, no change in ECB policy is expected for now, given that inflation is at its target level, the key interest rates stand at 2%, and the economy is stable and performing better than expected earlier in the year. The task now is to keep inflation at the target level, he added.
Against the backdrop of the EU initiative to establish a Capital Markets Union, Croatia has launched an initiative to develop a regional capital market with eight Central and Eastern European countries, including Bulgaria. The idea is to show at regional level that something like this can be achieved, Vujcic said.
Everyone should be able, for example, from Sofia, to buy shares in Zagreb, Warsaw or Budapest, and vice versa. This will be achieved mainly by harmonizing stock exchange rules and practices, he explained. By harmonizing regulations and market rules, liquidity will increase, investors will have more opportunities to invest, and companies will gain better access to capital markets, he added.
Currently, eight countries are participating in the initiative: Croatia, Slovenia, Bulgaria, Hungary, Poland, Slovakia, Romania, and North Macedonia as an observer.
Croatia is also actively involved in the development of another euro area project – the digital euro.
The digital euro will be based on several key pillars. Central banks will encourage its use and connect local payment service providers, while commercial banks will be on the front line, opening accounts and linking them to digital euro wallets. Clients will thus be integrated into the system through their local banks. As in the traditional payment system, commercial banks will handle customer relations directly – from onboarding to complaints – while the ECB and the network of euro area central banks will provide the core functions necessary for the operation of the digital euro.
The public’s adoption of the digital euro will depend on how attractive and easy to use it is, Vujcic said. It will offer another pan-European means of payment, alongside those that already exist. Croatia Got What It Expected from Adopting the Euro, Central Bank Governor Says THE NEWS FROM BULGARIA – NEWS AGENCY 2009-2025 2025-10-19 08:42:36 Latest news World news Country news Most important news latest news most important latest of the day Justice Petar Nizamov Feathers Petar Nizamov- Feathers Justice bg iustitia.bg iustitia iusticia usticia investigation Burgas Bulgaria news news of the last hour news of the day news of today Bulgaria news The news from Bulgaria blitz news top news most important most commented latest news Boyko Borisov news weather coronavirus news news weather facebook youtube facebook instagram news today news of the last minutes news today today news news bg news leading news hot news bg news site for news all news news bg news of the last hour latest latest news bg news of today news today news today news of the last hour latest news today news bg news news 24 hours news vesti bg novini news world bird bg bivol bg bivol trud bg novini latest news today novinite bg news hello bulgaria political party coat of arms delyan peevski scandalous Bulgarian National Television Free Europe Television scandal exclusive live tv live right now tv tv online tv program bg live now tv news online tv online live court Burgas court Burgas district court Burgas court Burgas district court Burgas district court Burgas appellate court Burgas prosecutor Burgas prosecutor’s office Burgas district prosecutor’s office Burgas district prosecutor’s office Burgas district prosecutor’s office Burgas district prosecutor’s office Burgas district prosecutor’s office Burgas district prosecutor’s office Prosecutor General Ivan Geshev Prosecutor Geshev Tsatsarov Ministry of Internal Affairs Burgas ODMR Burgas ODPR Burgas police Burgas district police Burgas prosecutor Tsatsarov SGS cases Varna court chairman of the SGS court decisions on civil cases decisions on cases Plovdiv court decision of the court decisions cases Varna court criminal cases district district court decisions work in the court SGS chairman of the SGS judges Sofia court post judges Plovdiv court Plovdiv judges Plovdiv Supreme Court Inspectorate Supreme Court Supreme Judicial Council lawyer lawyer criminal cases lawyer civil cases lawyer marriage cases lawyer administrative criminal law criminal process civil law civil process administrative law constitutional law
