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Croatia joins the Eurozone and becomes part of the Schengen Area

Croatia joins the Eurozone and becomes part of the Schengen Area

What is the Eurozone?

The eurozone includes all European Union member countries that use the euro as their currency.

To join the EuroZone, a country must meet certain criteria that ensure their legislation and monetary policies.  These must match the current standards of the European Union. These conditions are designed to maintain the stability of the Euro as well as discourage members to use any newly-found opportunity just for profit.

There are a few requirements that countries that want to adopt the euro need to meet in order to make the switch





  • Economic stability
  • Public finances
  • Legal and financial regulations.
It should also be ensured that joining the Euro may not lead to an economic downfall for any of the member countries within this area.

How do countries join the Eurozone?

In order to join the euro area, we have to show that our economy is meeting a set of standards.

These binding economic and legal conditions were agreed upon in the Maastricht Treaty in 1992 and are also known as 'Maastricht criteria'. Apart from Denmark, all EU Member States need to adopt the euro once they meet these standard requirements.

The Treaty does not specify a particular timetable for joining the euro area but leaves it to each member state to make their own decisions about meeting the condition for euro adoption

The European Commission and the European Central Bank jointly decide if the criteria are met for countries to join the Euro Area. They assess progress against twelve benchmarks set out in the Lisbon Treaty and publish their decisions. These plans were formally ratified by the ECOFIN council after consulting with the EU Parliament and other European country governments. If all goes well, the adoption process can begin.

What are the Benefits of Joining the EU and Schengen Zone?

The euro is a great currency with lots of benefits such as:

  • A globalized market allows for comparing prices in different countries, which leads to increased competition between businesses and benefits the consumer.
  • Stability in prices
  • The euro makes doing business both within the EU, and globally easier, cheaper and safer.
  • Improved growth and economic stability.
  • More efficient, more integrated financial markets
  • More impact on the global economy
  • Evidence of a European identity

One of the benefits is being connected to others. For example, economic stability makes the government able to make well-thought-out decisions and provide companies with certainty in the near future. But this also benefits a country's economy by allowing for growth - which generates revenue, attracts investors and puts people back to work. This means more jobs for everyone and a higher level of quality in those jobs.

The Schengen area allows more than 400 million people to travel freely between member countries without having to go through border control. 3.5 million people cross internal borders for work or study every day, and 1.7 million people are living in one Schengen country & working in another.





Europeans make an estimated 1.25 billion journeys each year within the Schengen area, which also greatly benefits the tourism and cultural sector. The Schengen Area brings clear economic benefits to all citizens and businesses that are included in it. It was designed with the European Union and the Single Market in mind.

Can non-EU countries benefit from Schengen?

Non-EU nationals visiting the EU can travel freely between EU countries without being stopped at borders.

Visitors from non-Schengen countries must apply for a Schengen visa before travelling. The EU has developed common rules for this visa.

An EU common visa policy would be necessary for the ability of people to enter the Schengen area without restriction, but it would also make it easier for us to ensure people aren't illegally entering.

What will happen after Croatia become a member of the Eurozone and Schengen Zone?

Croatia has officially joined Europe's passport-free zone, which is a significant milestone. In addition to this, the country has made the switch away from its old currency to the Euro. These are both great changes for Croatia that have come about thanks to joining the European Union 9 years ago. Starting tonight, the Balkan nation will use the Euro as its currency.

It is the 27th country in the passport-free Schengen zone, which allows for freedom of movement by more than 400 million people.

Currency:

Experts say that the Euro will help to protect Croatia's economy (which is soaring) because of Russia's invasion of Ukraine, which has led to skyrocketing prices on all things related to food and fuel. Many Croatians are on board with the idea, but there are mixed feelings.





While some welcome the end of border controls, others are worried about the Euro switch. One such concern is that it benefits large countries like France and Germany, but not their other neighbouring countries.

"We will cry for our kuna, prices will soar," said Drazen Golemac, a 63-year-old pensioner from Zagreb.

For Croatian travel agent Marko Pavic, "Croatia joins an elite club".

"The euro was already a measure of value - psychologically, it's nothing new. But you don't have to worry about a thing anymore because Schengen entry has been fantastic for tourism."

The Euro is the main currency circulating in Croatia

Croatians traditionally have had a preference for the Euro because of their lack of confidence in their local currency. As the New Year approaches, many customers have been queuing at banks & ATMs to withdraw cash in fear of payment problems as they wait to deposit their currency.

About 80% of Zagreb bank deposits are in Euros and the city's main trading partners are in the Eurozone.





Political Views:

EU officials have defended the decision to join the eurozone and Schengen, with Prime Minister Andrej Plenkovic saying that they were "two strategic goals of a deeper EU integration".

Croatia, a former Yugoslav republic that fought for independence in the 1990s, joined the European Union in 2013.

The Euro certainly brings economic stability, and safety, HNB president Ana Sabic said.

Experts are saying that the Euro is going to become more widely used and this trend will help improve conditions in Croatia. For example, last November Croatia's inflation rate was 13.5% while the inflation rate for the Eurozone was 10%.

Conventional wisdom says that eastern eurozone members, such as Poland or Hungary, are more vulnerable to inflation which is surging.

Borders:

As some Croatians lamented the demise of the national currency, HNB governor Boris Vujcic said that it was a sentimental moment but was also "the only reasonable politics".

The kuna has been around for quite a while and was first issued to the public in 1994.





Kuna is a term for a weasel-like animal that had its fur used as currency in the middle ages.

Today, Mr Vujcic will withdraw euros from a bank machine in downtown Zagreb.

Interior and foreign ministers will attend ceremonies at Croatia's borders with its European Union peers, Slovenia and Hungary respectively. The country will also be visited by the EU's chief Ursula von der Leyen.

Local newspapers have been supportive. The Vecernji List, a popular paper, celebrated the two events with a headline: "The crown of Zagreb's EU membership"

With Croatia set to join the Schengen Area soon, the country's tourism industry will surely be a big winner. The tourism industry is Croatia's second-largest sector after agriculture and accounts for about 20% of its economy.

You don't need to worry about long queues at 73 Slovenian and Hungarian Land Border Crossing Points anymore.

Border checks will only end on the 26th of March at airports due to technical issues.





Croatia will still have strict border control on its Eastern Border but will not be stopping any people coming in from Bosnia, Montenegro or Serbia.

Illegal migration is the biggest challenge in ensuring that the EU's longest contiguous external land border is well guarded.

Image by Allexxandar on Freepik

Image by Vectonauta on Freepik