Croatia Rings in the New Year by Welcoming the Euro and Schengen

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Croatia rings in the New Year by welcoming the euro and Schengen

Croatia rings in 2023 with adoption The euro was adopted as a currency and its incorporation into the Schengen area, an important milestone for this country that joined the euro area. It joined the European Union a decade ago.

With the change from the kuna, hitherto the national currency, to the euro, Croatia becomes 20th state to share a common currency. The last country that joined the Lithuania switched to the euro in 2015. Croatia had to comply with a series of fiscal and economic governance rules to adopt the single currency. The exchange rate will be 7.5345 kunas per euro, and the exchange will be free until the end of 2023 in all banks in the country.

Although the euro enters into force as the official currency this Sunday, January 1st, Croats will have a transition period that will last for 12 months. They will be able to pay with both currencies until January 14.

Under the treaties of the European Union (EU), all member states, with the exception of Denmark, are free to pay. They are forced to join the euro as soon as they meet the requirements, but some like Sweden, Poland or Hungarythey have not expressed the political will to do so.

First enlargement of the Schengen area since 2011

The last enlargement of the Schengen area was in 2011, when was included to Liechtenstein. With its incorporation, Croatian citizens will be able to move around the Schengen area without a passport.

Both the exchange of currency and its inclusion in the Schengen area could mean a tourism 'boom' ;stico for Croatia, which attracts tourists for its beaches along the Adriatic coast and for the medieval city of Dubrovnik.

The removal of border controls with Slovenia and Hungary and for the ferries to Italy will also facilitate the arrival of tourists and business travelers. However, people arriving in the country by plane will not benefit from the advantages of the Schengen area until March 26.

The country's statistics show that between January and November, Croatia received 16 million foreign visitors, close to the 17.3 million that Cuba received. It was in its record year, 2019, before the pandemic.

The President of the European Commission, √örsula von der Leyen , plans to do this Sunday a symbolic visit to the border between Slovenia and Croatia, in the towns of Obrezje and Bregana.

Economic measures

The adoption of the euro comes at a difficult time, with the war in Ukraine, rising energy costs, problems in the supply chain and soaring inflation. All over Europe.

Croatia's inflation rate was around 100%. in November at 13.5%, above the EU average, at 10.1%. EU Trade Commissioner Valdis Dombrovskis, based on previous experience, expects a price increase of between 0.1% and 0.3% after the entry into circulation of the euro.

The medium term, however, this situation is expected to be offset by lower currency conversion costs and lower interest rates. Forecasts estimate that inflation in Croatia will fall to 5.7% in 2023.

Croats, for their part, believe that traders will round up the price conversion. The Eurobarometer for April showed 55% of citizens were in favor of the euro, while 42% were against it.

Croats have lived for decades with a dual currency system. Since the 1970s, when many Croats moved to Western Europe, often to Germany, for work and with the massive arrival of tourists, life has normalized. You will pay in German marks, and later in euros, for homes, cars and other high-priced goods.