Croatia has begun the procedure to join the European Exchange Rate Mechanism (ERM II) that could one day enable it to join the euro zone, its national bank announced on Thursday.
Zagreb hopes to incorporate ERM II, known as the euro “antechamber”, by mid-2020 and join the euro zone three years later.
The Croatian authorities emphasise the advantages that the euro would bring since about 80% of the country’s bank deposits are in euros and the country’s main trading partners belong to the euro zone.
Recent polls nonetheless show that the population is divided on entering the euro zone, with only 39 – 52% in favour.
A letter of intent to join the mechanism, signed by finance minister Zdravko Maric and the governor of the national bank Boris Vujcic, has been addressed to the euro zone members and to the EU institutions, outlining the reform plans Zagreb aims to put into action to achieve its objective, a press release from Croatia’s National Bank (HNB) stated.
“Significant progress in reducing macroeconomic deficits has enabled this application to be made. Economic revival, increasing exports, lower unemployment, the decrease in debt have strengthened the Croatian economy,” the communiqué says.
Croatia joined the EU in 2013 and has one of the union’s weakest economies. In April, the average salary stood at 6,434 kunas (870 euros) and unemployment at 8.5%.