In spite of the eurozone’s woes, Croatia, the EU’s newest member, is set on adopting the euro. In an exclusive interview with fDi at the World Bank annual meetings in Washington DC, Boris Vujcic, the Croatian National Bank governor, said that switching to the euro “as soon as possible” was “the best option [for Croatia]”.
The country’s stance on the euro contrasts strongly with that of Poland and the Czech Republic. Both Marek Belka, governor of the National Bank of Poland, and Miroslav Singer, head of the Czech National Bank, recently told fDi that they did not expect to see their countries joining the eurozone any time soon.
In fact, Mr Belka said Poland might be deliberately delaying its adoption of the common currency. “We look at the eurozone and we see that the situation there is still difficult, problems over there remain unsolved, so why would we push hard to be there?”
Although all three countries are bound by treaties of accession to adopt the euro, Croatia may have more reason to do so. “As a legacy of the past, people to a large extent already save in euros,” said Mr Vujcic. Moreover, the kuna, the Croatian currency, is closely tied to euro already. “I always quote the Bob Dylan song 'When you ain't got nothing, you got nothing to lose'. If you don't have independent monetary policy, what are you going to lose by entering into the monetary union?" said Mr Vujcic during his speech in London earlier this year.
However, to join the eurozone, Croatia will need to meet the EU’s five convergence criteria, such as maintaining an annual average inflation rate below 2.5% and entering the European Exchange Rate Mechanism. So far Croatia, which is currently battling a five-year recession, meets only one criterion: the debt-to-GDP ratio. Mr Vujcic said that as much as joining the eurozone was the “next step” for Croatia, “it is not around the corner”.
Paradoxically, that can play in Croatia's favour, claimed Mr Vujcic. “At this moment, it is almost a luxury to be out [of the eurozone], and wait and see how things develop,” he said. He expects the eurozone will overcome the ongoing crisis in the next two to three years and 2015 to 2017 will be when Croatia will work more actively towards adopting the euro currency. “At that time... the dust will settle and it is going to be much more clear [to see] what the future of the eurozone is.”