Croatia is the twentieth country in the euro area
Today the euro has become the currency of Croatia; thus the number of European Union (EU) member states that use the single currency rises to 20. “I am delighted to welcome Croatia to the euro family and to the Governing Council of the ECB in Frankfurt,” said Christine Lagarde, President of the European Central Bank. “Croatia has worked hard and successfully to become the 20th member of the euro area. I congratulate Croatian citizens. This demonstrates the attractiveness of the euro, which brings stability to countries adopting it.”
With Croatia’s entry into the euro area, Hrvatska narodna banka, the Croatian central bank, joins the Eurosystem. The central banking system of the euro area comprises the ECB and the national central banks of countries whose currency is the euro.
Hrvatska narodna banka also becomes a full member of the Single Supervisory Mechanism; however, the country had established close cooperation already in October 2020. Thus, the ECB is currently responsible for the direct supervision of five significant institutions and the supervision of sixteen less significant institutions in Croatia. As part of its supervisory functions, it is also up to the ECB to grant authorization for the exercise of banking activity and to evaluate the acquisition of qualifying shareholdings in all banks. Hrvatska narodna banka is already represented on the Supervisory Board of the ECB.
Hrvatska narodna banka, reads a note from the ECB, has paid up the remaining part of the ECB’s share capital subscribed by it and has transferred its contribution to the ECB’s official reserves. Croatian counterparties to the Eurosystem will be able to participate in the ECB’s open market operations announced after 1 January 2023.
The list of credit institutions and branches of credit institutions located in Croatia subject to minimum reserves will be published shortly on the ECB’s website, together with lists of branches of Croatian credit institutions located in other EU Member States which already they use the euro. On 28 October 2022, the ECB announced the transitional provisions for the application of minimum reserves. Assets held in Croatia that meet the necessary requirements will be added to the list of eligible euro area collateral.
With Croatia joining the euro area as the 20th member country, the system of rotation of voting rights in the Governing Council of the ECB has been updated. The rotation is applied according to a calendar. Croatia’s participation in the euro area also led to changes in the capital subscription rates for the Eurosystem.