On January 1, Croatia with a population of 4 million will become the 20th country to adopt the euro and also join the Schengen area.

According to economists, the transition from the kuna should be beneficial, because more than half of Croatia's foreign trade, two-thirds of foreign direct investment and about 70% of tourism depend on the single currency area..

It will also be a symbolic boost to European unity as Russia seeks to undermine it with its war against Ukraine.. European Central Bank President Christine Lagarde called the addition "

Switching to the euro would be a natural step for a country where the single currency already accounts for half of all bank deposits and 60% of all loans - more than in any country outside the eurozone.

“Croatia is the country that will benefit the most from joining the Eurozone, as it will eliminate currency risk. The currency risk in Croatia is the highest,” said Boris Vujicic, Governor of the Croatian Central Bank.

Croatia has 27 billion euros in foreign exchange reserves - 40 percent of its gross domestic product - though joining the euro means it "

The benefits of the euro are " “They had to step in and raise interest rates significantly, and their 10-year government bond yields are now between 5% and 8.5%,” he said..

At the same time, the yield on 10-year bonds of Croatia was about 3.5%, which is lower than in Italy and Greece, and slightly higher than in Spain, although the country has not yet joined the euro. “There is a huge confidence effect,” said Vujicic, who will be able to vote on ECB policy decisions from January..

[see_also ids\u003d"

He acknowledged the risk that Croatian consumers would blame the introduction of the euro for high inflation, which reached 13.5% last month.. However, on average, countries that adopted the euro experienced only 0.2–0.4 percentage points of inflation growth, albeit during periods of lower price growth..

To increase pricing transparency, shops in Croatia must display the cost of goods in both kunas and euros from September, and will do so until the end of 2023. Businesses threatened with fines if they try to take advantage of the crossing to raise prices.

The central bank has deployed the army to guard about 40% of the kuna coins, which are expected to be exchanged for the euro.. " Coins are planned to be handed over for metal in three years.

Previously, Bulgaria switched to the euro..