The European Union gave its final approval for Croatia to adopt the euro early next year, when it will become the 20th member of the currency area.
Finance ministers from the bloc meeting in Brussels backed the move Tuesday after the European Commission, the EU's executive arm, recommended that the Adriatic nation of 3.9 million people should be allowed to adopt the common currency. The commission found that the country has the necessary requirements on issues such as inflation and public debt.
According to a senior official, Croatia will join the single currency at a conversion rate of 7.5345 kuna per euro. The rate is the same as it was established in July 2020 for entry into the euro area waiting room, known as ERM-2. That rate was allowed to fluctuate.
Croatia is the first newcomer since Lithuania in 2015, according to the final thumbs-up. Like the Baltic country, its bid had been in part aimed at cementing a Western alignment after decades of communist rule after World War II. There will be economic gains as well, such as lower interest rates and better credit ratings.
The move vaults Croatia into the EU's core, making payments easier and cheaper and giving its financial system a safety net in future crises. The country, whose top tourist attractions include Split and Dubrovnik on its Adriatic coast, aims to join the Schengen zone, which removes barriers to travel around Europe.
Other eastern EU members - including Bulgaria and Romania - are trying to follow suit. Some in the region are less eager after seeing the benefits of independent monetary policy in the wake of the 2008 global financial crisis.
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