Croatia Switches to Euro from Kuno Joins Schengen Zone

Croatia Switches to Euro from Kuno Joins Schengen Zone

January 2, 2023 - 8:37 am

Only Seven EU Nations Continue to Use Their Own Respective Currencies 

Croatia bids farewell to Kuna currency and becomes the 20th European Member to adopt Euro as its new currency and 27th nation to join Euro’s passport free-Schengen zone effecting from January 1, 2023. Croatia becomes the latest nation to join the Eurozone since Luthania in 2015. There are only seven EU nations Bulgaria, Sweden, Romania, Hungary, Poland, Czech Republic, and Denmark left who will continue to use their own respective currencies. Visitors are still required to exchange money before they travel in these countries. 

What are the Conditions/Benefits to Join the Euro?

3.9 million people live in the former Yugoslav nation of Croatia, which fought an independence war in the 1990s, and joined the EU in 2013. A country needs to meet a set of economic conditions including low inflation, stable exchange and sound public spending rate in order to join the Euro. With this adoption, Eastern economic countries of Europe are expected to get benefits by improving the living standards of its citizens and improving financial security. Croatia will also benefit economically from closer financial links with the single currency area’s other members and the European central banks for  roughly 70% of its tourists, more than half its external trade,and  two-thirds of foreign direct investment. Also, it will eliminate foreign currency risk. The adoption of the euro will protect Croatia's economy against inflation at a time when costs for food and petrol are skyrocketing globally due to Russia's invasion of Ukraine.

Croatia’s Entry into Schengen Zone 

A new beginning for the little Balkan nation, Croats will now be among the over 420 million people who are able to travel freely between its 27 member countries for work or pleasure after joining Europe's ID-check-free Schengen zone. Its entry into the Schengen zone will provide a boost to the key tourism industries of Adriatic nations which accounts for 20% of its GDP. Long lines at the 73 land border crossings with Slovenia and Hungary, two other EU members, will be a thing of the past.

Challenges Ahead for Croatia 

Border checks at airports won't end until March 26 due to technical issues. Serbia, Bosnia, and Montenegro are Croatia's neighbours who are not members of the EU, hence Croatia will continue to undertake thorough border checks there. With 1,350 kilometres, stopping illegal immigration continues to be the biggest difficulty in protecting the EU's longest external land border. Some people are concerned about the changeover to the euro; a right-wing opposition party claims it primarily favours powerful nations like Germany and France. In November, Croatia's inflation rate was 13.5% compared to the eurozone's 10%. Analysts emphasise that countries in the eastern EU that use currencies other than those of the eurozone, such Poland or Hungary, have been more exposed to rising inflation. 

The Road Ahead for Croatia

Retailers and the government have faced logistical difficulties as a result of the changeover. Only 14 days will see the dual use of the Croatian kuna and the euro for cash transactions; however, when individuals go shopping in January after the holidays, they will only get change in euros. Many Croatians saw the events of New Year's Eve as evidence that their nation had successfully made the difficult transition to the continent of Europe.