Tourism: Traveling is becoming easier: Croatia is a Euro and Schengen country

At the turn of the year, the EU country Croatia introduced the euro instead of the national currency kuna.

Tourism: Traveling is becoming easier: Croatia is a Euro and Schengen country

At the turn of the year, the EU country Croatia introduced the euro instead of the national currency kuna. At the same time, the popular holiday destination on the Adriatic joined the border-free Schengen zone.

This means double relief for millions of tourists from Germany: They no longer have to exchange money, save themselves exchange rate losses - and they can now reach their travel destination without the previously often hour-long waiting times at the Slovenian-Croatian border crossings.

EU Commission President Ursula von der Leyen, Slovenian President Natasa Pirc-Musar and Croatian Prime Minister Andrej Plenkovic met at the Croatian-Slovenian border crossing at Bregana on Sunday afternoon. The border police had stopped checking there and at the other crossings to Slovenia and Hungary twelve hours earlier. "Travel without barriers will bring communities even closer together," von der Leyen wrote on Twitter.

ECB congratulates on the introduction of the euro

The European Central Bank (ECB) welcomed Croatia as a new member of the euro area on Sunday. "I welcome Croatia to the euro family and to the Governing Council table in Frankfurt," said Central Bank President Christine Lagarde. "Croatia worked hard to become the 20th member of the euro area and it was successful. I congratulate the Croatian people."

Lithuania last introduced the common currency in 2015. The euro replaces the national currency kuna, which has been in circulation since 1994. The former Yugoslav republic became independent in 1991, and Croatia joined the EU in 2013. The country had to meet a number of conditions for the introduction of the European common currency.

euros instead of kuna

The exchange rate is fixed: one euro equals 7.5345 kuna. There is a transitional period until January 14, during which payments can still be made in both currencies. Kuna from the last holiday can be exchanged at banks in Croatia free of charge until the end of 2023 - up to 100 coins and notes per transaction.

Croatia's entry into the euro is boosting the production of coins in the common currency area. The European Central Bank (ECB) has authorized the 19 euro countries and Croatia to produce coins with a total volume of almost 2.6 billion euros for 2023. According to this, Croatia is planning to mint euro coins with a total volume of around 316 million euros.

According to the EU treaties, all member states except Denmark are obliged to join the common currency as soon as they meet the requirements. However, several countries are not pursuing this vigorously - such as Sweden, Poland and Hungary.

High expectations in tourism

The tourism industry in Croatia in particular has high expectations. The country with the long Adriatic coast and the many picturesque bays and islands thrives on tourism. The statistics show around 16 million foreign holidaymakers, including 3.4 million Germans, for the first eleven months of 2022. In the record year 2019, the last year before the start of the corona pandemic, there were 17.3 million, 2.9 million of them Germans. The holiday country is also popular with Austrians, Slovenes and Poles (each with more than a million travelers in 2022) as well as tourists from Italy, the Czech Republic and Great Britain (each with more than 700,000 travelers).

Inflation drivers - or is everything not so bad?

Never before has the introduction of the euro been accompanied by such global economic upheavals. Russia's war in Ukraine, increased energy costs and delivery problems in the wake of the corona pandemic proved to be inflation drivers across Europe. At 13.5 percent, the inflation rate in Croatia in November was above the EU average of 10.1 percent. Valdis Dombrovskis, Vice President of the EU Commission, put the one-off effect of the introduction of the euro at 0.1 to 0.3 percentage points based on previous experience. In the medium term, however, this will be offset by lower currency conversion costs and lower interest rates. Inflation is forecast to drop to 5.7 percent in 2023.

Croatia's citizens in rather anxious expectation

The Croats, on the other hand, are based on their own life experience and expect that retailers and service providers will round up the conversion wherever they can. The popularity of the introduction of the euro is therefore limited. In an April poll, 55 percent of citizens were in favor of the euro, while 42 percent opposed it.

The Croats have been living in a dual currency system for decades. Ever since millions of them moved to the West - often to Germany - as guest workers from the 1970s and holidaymakers flocked to the Adriatic Sea in droves, real estate, cars and other high-priced goods have usually been paid for in Deutschmarks and then in euros. People looked with pity on their own money - the Yugoslav, then the Croatian dinar and finally the kuna. That was the money for daily shopping, for the modest pensions of those who stayed in the country, for the pocket money for the children.

anchor of stability for the economy

What holidaymakers gain from the elimination of exchange fees, Croatia's banks lose. According to experts, the loss of profits should amount to around 1.4 billion kuna (185 million euros), around 20 percent of the profit generated by the sector. From the point of view of economists, however, the advantages outweigh the medium and long term. Participation in the euro means greater resilience to external shocks and better access to financial markets. The currency risk for lenders is reduced, Croatia can get loans with lower interest rates.

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