Croatia, a new member of the European Union, adopts the euro as its currency on January 1. The move brings the country of about 4 million people into the core of the EU, making payments easier and cheaper and providing its financial system with a safety net against future crises.. The country, whose economy is heavily dependent on foreign tourists, also joins the Schengen area, Bloomberg writes..

[see_also ids\u003d"

Why Croatia joins the Eurozone?

Croatia began to seek entry into a single currency immediately after it received the right to join the EU in 2013. The move is partly intended to cement a Western orientation after some half a century of post-World War II communist rule..

What about economic logic?

This is perhaps even more convincing.. The country, more than any other EU state, depends on tourists, who provide a fifth of the gross domestic product and find holidays much easier when they don't have to struggle with exchange rates..

Meanwhile, most private and corporate bank deposits in Croatia are held in euros, as are more than two-thirds of the debt, totaling about 520 billion.. kuna ($74 billion. Eurozone membership could lower interest rates, improve credit ratings and make Croatia more attractive to investors, according to central bank governor Boris Vujicic.

What are the advantages?

The adoption of the euro formalizes some of the economic activity that is already carried out using the single currency - from the sale of apartments and cars to short-term rentals for holidaymakers. According to the central bank, this reduces foreign exchange spending outside of tourism by about 1.2 billion kunas per year.. Croatia accesses ECB liquidity and potential bailout funding from the European Stability Mechanism in times of crisis.

For example, Greece's problems have already largely remained in the rearview mirror, the transition to the euro was supported by the population. Almost all political parties supported this move..

And cons?

In terms of monetary policy, there is not much to lose by handing over control to the ECB as the kuna exchange rate has been in a tight trading band against the euro since the 1990s.

Croatia's switch to the euro will cost local banks about 1 billion kunas a year in lost conversion fees, but the switch reduces currency risks and improves stability, according to the national association of banks. The transition to the euro is also expected to cost banks €80-100 million in one-time costs to adapt IT services and ATM networks.

What obstacles did you face?

EU member states gave their final consent to Croatia's entry into the eurozone on July 12, following Eastern European countries Estonia, Latvia, Lithuania, Slovakia and Slovenia.

Inflation has turned out to be the biggest problem since the war in Ukraine sent prices for energy and other commodities skyrocketing.. But this problem is everywhere. In November, according to the latest data, inflation in the eurozone fell, but consumer prices still rose by 10.1% compared to the previous year..

What the new Croatian coins look like?

The coins show a map of the country and a national checkerboard pattern.. They also feature a kuna, or weasel, and inventor Nikola Tesla, an ethnic Serb born in the modern Croatian city of Smiljan. Serbia's central bank says it will take action if Croatia is allowed to use Tesla image.

What other countries want to join the euro?

Bulgaria.

But it has pushed back the deadline by a year to 2024, after being admitted to the eurozone waiting room, known as ERM-2, in 2020, at the same time as Croatia.. Romania also expressed a desire. However, despite the fact that at some point they will be obliged to join, the largest countries in the region are in no hurry. Poland, for example, attributes its ability to weather the 2008 global financial crisis without a recession to maintaining an independent monetary policy..

[see_also ids\u003d"