The Vice-president of the European Commission tasked with the Euro, social dialogue and financial stability, Valdis Dombrovskis, said on Tuesday that Croatia is working seriously and intensively on introducing the Euro.
He said that the process of Croatia's joining the Eurozone will be similar to that of Bulgaria, which has already sent a letter of intent.
“Croatia is working seriously and intensively on achieving conditions for entry into the Eurozone,” Valdis Dombrovskis told reporters on the margins of a conference organized by the European Commission titled "Five years with the Euro" in Riga, which is marking five years since the single European currency was introduced in Latvia.
He noted that expansion of the Eurozone is an open procedure based on rules, in which all EU members, except Denmark and the United Kingdom, are legally obligated to introduce the Euro, even though there are no deadlines for their entry into the Eurozone.
“In any case, the European Commission supports efforts by members to introduce the Euro, not only politically but also by providing needed technical assistance, potentially financially,” said Dombrovskis.
Croatia and Bulgaria have expressed the intent to join the Eurozone five years after the last round of expansion of the European Monetary Union.
In the meantime, due to the financial crisis, a reform was conducted in the Eurozone to strengthen it from the inside, so that besides entry into the exchange mechanism ERMII, candidates must also join the so-called close cooperation and Single Supervisory Mechanism (SSM).
Close cooperation is understood to mean that the biggest domestic banks will be supervised by the European Central Bank, which implies a series of legal, operational and technical preparations which require a certain amount of time.
Entry of Croatia into the ERM II could most likely take place a year after a letter of intent has been sent, meaning somewhere in 2020. While there are no formal criteria for entering ERM II, Eurozone members must accept Croatia as a good candidate.
“The process of entry into the exchange mechanism, and then into the Eurozone for Croatia will be similar to the one Bulgaria is going through. Croatia will be able to use that country as a sort of example in the context of resolving all challenges on that path, while specific obligations for them will naturally differ,” said Dombrovskis.
Bulgaria sent a letter of intent to the European Central Bank and other European Institutions regarding entry into the ERM II last year.
Dombrovskis estimated that Bulgaria could join the exchange mechanism ERM II by the middle of the year.
“After that”, he said “a minimum of three years must pass until the actual introduction of the Euro if that country fulfils all criteria – two years in the exchange mechanism, then a minimum of a year is needed to evaluate its achievements and practical preparations for changing the Bulgarian Lev with the Euro.”
Touching upon reforms that Croatia must implement, Dombrovskis said that the sooner they are implemented, the sooner it will be able to enjoy the benefits of the single European currency.
“Especially for countries like Croatia and Bulgaria, and that was the case with Latvia, who have the exchange rate of their national currency tied to the Euro, but at the same time they don’t enjoy benefits from the mutual currency, it makes no sense to delay the move to the Eurozone. For such countries it is best to join the Eurozone as soon as possible,” believes Dombrovskis.
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