Croatia and the euro
Croatia's currency, the kuna, has used the euro (and prior to that one of the euro's major predecessors, the Deutsche Mark) as its main reference since its creation in 1994, and a long-held policy of the Croatian National Bank has been to keep the kuna's exchange rate with the euro within a relatively stable range.
Croatia's EU membership obliges it to eventually join the eurozone, as such the country plans to join the European Monetary System, the pathway to euro adoption. Prior to Croatian entry to the EU on 1 July 2013, Boris Vujčić, governor of the Croatian National Bank, stated that he would like the kuna to be replaced by the euro as soon as possible after the accession. This must be a least two years after Croatia joins the ERM2 (in addition to it meeting other criteria). The Croatian National Bank had anticipated euro adoption within two or three years of EU entry. However, the EU's response to the ongoing financial crises in eurozone states may delay Croatia's adoption of the euro. The country's own contracting economy also poses a major challenge to it meeting the convergence criteria.  While keen on euro adoption, one month before Croatia's EU entry governor Vujčić admitted "...we have no date [to join the single currency] in mind at the moment". Before Croatia can join ERM II, it must reduce its budget deficit by about 1.5 billion kuna (June 2013 figures). The European Central Bank expects Croatia to be approved for ERM II membership in 2016 at the earliest, with euro adoption in 2019. 
Many small businesses in Croatia had debts denominated in Euro before EU accession.
Croatia currently meets 1 out of the 5 convergence criteria.
|Assessment month||Country||HICP inflation rate
of annual rates)[nb 1]
|Budget deficit to GDP||Debt-to-GDP ratio||ERM II member||Long-term interest rate
of 10yr bond yields)[nb 2]
|April 2013||Reference values||max. 2.5%[nb 3][nb 4]
(as of 31 Mar 2013)
(Fiscal year 2012)
|max. 60%, or decreasing
(Fiscal year 2012)
|min. 2 years
(as of 31 Mar 2013)
|max. 4.81%[nb 3][nb 5]
(as of 31 Mar 2013)
- The 12-months average for the annual HICP inflation rate must be no more than 1.5% larger than the unweighted arithmetic average of the similar HICP inflation rates in the 3 EU member states with the lowest HICP inflation. If any of these 3 states have a HICP rate significantly below the similarly averaged HICP rate for the eurozone (which according to ECB practice means more than 2% below), and if this low HICP rate has been primarily caused by exceptional circumstances (i.e. severe wage cuts or a strong recession), then such a state is not included in the calculation of the reference value and is replaced by the EU state with the fourth lowest HICP rate.
- The annual average for the yield of 10-year government bonds must be no more than 2.0% larger than the unweighted arithmetic average of the bond yields in the 3 EU member states with the lowest HICP inflation. If any of these states have bond yields which are significantly larger than the similarly averaged yield for the eurozone (which according to previous ECB reports means more than 2% above) and at the same time does not have complete funding access to financial markets (which is the case for as long as a government receives bailout funds), then such a state is not be included in the calculation of the reference value.
- The reference values for HICP inflation and long-term interest rates are calculated based on the "calculation principle" outlined in the 2012 ECB Convergence Report, with the input of forecasted data for the sliding assessment year 1 April 2012 - 31 March 2013.
- The 3 best performing countries in regards to HICP inflation were Greece (0.614%), Sweden (0.843%) and Latvia (1.567%), with no outliers detected.
- As Greece is part of a bailout program, and suffered from elevated interest rates significantly above the eurozone average (15.40% above), this country was excluded from the calculation of the reference limit for long term interest rates, leaving just Sweden (1.61%) and Latvia (4.00%) as benchmark countries.
- "Bank Governor Determined For Croatia To Adopt Euro Currency ASAP". http://www.croatiaweek.c. Retrieved 7 September 2013.
- "Monetary policy and ERM II participation on the path to the euro". Speech by Lucas Papademos, Vice President of the ECB at the tenth Dubrovnik economic conference, in Dubrovnik. European Central Bank. 2004-06-25.
- "Vujčić: uvođenje eura dvije, tri godine nakon ulaska u EU". Poslovni dnevnik (in Croatian). HINA. 1 July 2006. Retrieved 2011-01-01. "statements made by Boris Vujčić, deputy governor of the Croatian National Bank (now governor (2013)), at the Dubrovnik economic conference, June 2006"
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- Joy, Oliver (21 January 2013). "Did Croatia get lucky on EU membership?". CNN.
- "HICP (2005=100): Monthly data (12-month average rate of annual change)". Eurostat. 16 August 2012. Retrieved 6 September 2012.
- "What is ERM II?". European Commission. 31 July 2012. Retrieved 8 September 2012.
- "Long-term interest rate statistics for EU Member States (monthly data for the average of the past year)". Eurostat. Retrieved 18 December 2012.
- "Convergence report 2012". European Central Bank. May 2012. Retrieved 2013-01-15.
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- Croatia 10-Year Bond Yield - Historical Data
- "Luxembourg Report prepared in accordance with Article 126(3) of the Treaty" (PDF). European Commission. 12 May 2010. Retrieved 18 November 2012.
- "EMI Annual Report 1994" (PDF). European Monetary Institute (EMI). April 1995. Retrieved 22 November 2012.
- "Progress towards convergence - Nov. 1995 (report prepared in accordance with article 7 of the EMI statute)" (PDF). European Monetary Institute (EMI). November 1995. Retrieved 22 November 2012.
- "Progress towards convergence - November 1995 (report prepared in accordance with article 7 of the EMI statute)" (PDF). European Monetary Institute (EMI). November 1995. Retrieved 17 March 2013.