Croatia has switched to the euro and entered Europe’s passport-free zone – two important milestones for the country after joining the European Union (EU) nearly a decade ago. At midnight, the Balkan nation bid farewell to its kuna currency and became the 20th member of the eurozone. It is now the 27th nation in the Schengen zone, the world’s largest passport-free travel area, which enables more than 400 million people to move freely around its members.
Croatia: A Prolonged Transition:
Croatia, a former Yugoslav republic of 3.9 million people that fought a war of independence in the 1990s, joined the EU in 2013.
Significance of This For Croatia:
- Experts say the adoption of the euro will help shield Croatia’s economy at a time when inflation is soaring worldwide after Russia’s invasion of Ukraine sent food and fuel prices through the roof.
- But feelings among Croatians are mixed. While they welcome the end of border controls, some fear the euro switch will lead to an increase in the cost of living as businesses round up prices when they convert them.
- Experts say the adoption of the euro will lower borrowing conditions amid economic hardship. Croatia’s inflation rate reached 13.5 percent in November compared with 10 percent in the eurozone.
- Croatia’s entry into the Schengen borderless area is expected to provide a boost to the Adriatic nation’s key tourism industry, which accounts for 20 percent of its gross domestic product (GDP).
What is Schengen Area:
The Schengen Area is an area that comprises 27 European countries that have abolished all passports and border control at their respective mutual borders.
- The name of this area comes from the 1985 Schengen Agreement that was signed in Schengen, Luxembourg.
- This region serves as a single jurisdiction for international travel, with a unified visa policy.
- Of the European Union’s 27-member states, 23 take part in the Schengen Area.
What is Eurozone:
- The Eurozone officially called the euro area is a monetary union of 20 of the 27 European Union (EU) member states which have adopted the euro as their common currency and sole legal tender.
- The monetary authority of the Eurozone is the Eurosystem.
- It consists of Austria, Belgium, Cyprus, Croatia, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.