INTRODUCTION OF THE EURO IN THE REPUBLIC OF CROATIA

This summer, we will have the certainty that we are introducing the euro, which will be introduced on 1 January of next year. Preparations are in full swing to ensure that everything is in place for that day when we will replace the kuna with the euro. The Croatian National Bank (HNB), banks, the private and public sectors are intensely preparing, especially in the area of dual price display, stocking euro banknotes and coins, and the withdrawal of kunas, as well as adapting information systems for the conversion from kunas to euros. The introduction of the euro date depends on the decisions of the European Union Council, which will determine whether the Republic of Croatia has met the prescribed criteria related to price stability, the sustainability of public finance, exchange rate stability, and long-term interest rate convergence. The European Union Council also determines the exchange rate at which the kuna will be converted to the euro. For better public awareness, we have prepared a brief overview of the activities:

EURO

The euro is a common currency of a large number of the European Union member states and one of the main symbols of European integration. Today, the euro is used in 19 member states. Each member state of the eurozone has the possibility to place a national motive on one side of the euro coins, thus also Croatian euro coins will bear national designs. [caption id="attachment_84527" align="aligncenter" width="1015"]

Foto: vlada.gov.hr[/caption]

PERIOD OF DUAL PRICING

Dual pricing refers exclusively to the display of prices in two valutes, namely in kunas and euros, to consumers. In addition to prices, the total amount on accounts in trade will be dual, as will payment amounts, the balance of funds on current accounts at banks, as well as other important information at other financial service providers (insurance companies, pension funds...). The obligation of dual pricing begins at the latest by 5 September 2022 (after the European Union Council announces that the Republic of Croatia has met all the criteria). The obligation of dual pricing will last 12 months from the date of the introduction of the euro.

PERIOD OF DUAL WITHDRAWAL OF KUNA AND EUR

In the first two weeks from the day of the introduction of the euro, citizens will be able to pay in kunas and euros, while trade will be obliged to return only euros, unless this will not be possible for practical reasons.

Exchange rate for conversion of kunas to euros

Price recalculation will be performed according to a fixed exchange rate, which is determined and published by the European Union Council, and it will be known approximately six months before the official introduction of the euro. The fixed exchange rate will consist of six digits, namely a whole number followed by five decimal places, while rounding to two decimal places is not allowed before the conversion is performed.

CONVERSION OF DEPOSIT

All kuna funds on current, giro accounts and deposit accounts at banks will be converted to euros on the day of the introduction of the euro according to the fixed exchange rate, without any additional charge.

CONVERSION OF CASH

Until the introduction of the euro Banks and exchange offices will use the purchase and sale exchange rates until the first day of the introduction of the euro, with the payment of a currency conversion fee. Therefore, it is more beneficial for citizens to deposit funds on bank accounts and wait for the first day of the introduction of the euro, as they will not lose on exchange rate differences and the payment of the fee. The first day of the introduction of the euro Every kuna on deposit and on all other accounts will be converted to euros according to the fixed exchange rate, without any additional charge. First half of the year from the introduction of the euro Citizens who do not deposit money in the bank can wait until the introduction of the euro and the first half of the year to exchange without any additional cost kunas to euros at banks, by post or at Fini according to the fixed exchange rate. Second half of the year from the introduction of the euro In the second half of the year, kunas can still be exchanged at banks, with the payment of a fee which is defined by the bank. After the expiration of the first year After the expiration of the first year from the day of the introduction of the euro, only the HNB will directly exchange kunas into euros without any additional charge. There is no time limit for exchanging kunas for euros.

CONVERSION OF CREDIT

From the date of the introduction of the euro, all credits denominated in kunas will be converted to euros, and credits with a currency clause in euros will be considered as credits in euros. Kuna-denominated credits Amounts denoted in kunas will be recalculated in euros by applying the fixed exchange rate. Kuna-denominated credit with a currency clause in Euros Amounts denoted in the currency clause in Euros will be considered as amounts in Euros, i.e. there will be no recalculation. Interest rate In the case of credits with a fixed interest rate, the introduction of the euro will not change the interest rate. In the case of credits agreed with a variable interest rate, on the day of the introduction of the euro, the existing parameters on which the variable interest rate depends (e.g. NRS) will be modified if necessary. All of this will be regulated in detail by the Law on the Euro, and the overall interest rate will not be higher than it was before the introduction of the euro. Agreements and legal instruments The introduction of the euro does not affect the validity of existing legal instruments in which the kuna is mentioned. All agreements and legal instruments in kunas and beyond will continue to be valid, and parts of the agreements related to the value in kunas will be legally meaningful as the value in euros, calculated according to the fixed exchange rate. The documentation will not change. More information on the introduction of the euro in the Republic of Croatia is available at: https://euro.hnb.hr/ * We used data available on the websites of the Croatian Government (vlada.gov.hr) and the HNB (euro.hnb.hr) relating to the introduction of the euro in the Republic of Croatia and the HNB's Strategy for the Introduction of the Euro as a Common Currency in Croatia. Author: Martina Mataić Škugor

THE EFFECT OF THE INTRODUCTION OF THE EURO ON THE PROPERTY MARKET

Boro Vujović Director of Operetta According to analyses of the market where the euro was introduced, there was no change in prices as a direct result of the introduction of the euro. When we talk about the property market, prices are traditionally expressed, sometimes in marks and sometimes in euros, so it is unlikely that we will feel the effect that may occur in other activities when prices are rounded up to higher values and lead to an increase due to this. A greater impact on the property price in the Republic of Croatia will have the entry into the Schengen zone, as it will facilitate communication and the flow of people between Croatia and other EU countries, so that effect will be more reflected in property prices. We expect the Swiss effect for all counties bordering the EU, especially Istria and Littoral- Gorski Kotar County due to their proximity to Slovenia. A certain number of buyers may buy a property for living in Croatia, working in Slovenia.'

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