EU accepts Croatia as 20th euro zone member

Croatia's finance minister Zdravko Maric walks ahead of the European Union finance ministers meeting in Brussels, Belgium, 12 July 2022.

European Union finance ministers on Tuesday formally approved Croatia becoming the 20th member of the euro common currency at the start of 2023, a move hailed as the culmination of an "amazing journey" for a Balkan nation once at war.

European Commission vice president Valdis Dombrovskis said Croatia's accession confirmed that the euro remained an "attractive, resilient and successful global currency" and a symbol of strength and unity.

"This is particularly important at such a challenging time when Russia's aggression against Ukraine continues to send shock waves around the world," Dombrovskis told a ceremony to mark Croatia's accession, the euro zone's first expansion since 2015.

The European Council, the grouping of 27 EU governments, adopted three legal acts required to allow Croatia - an EU member state since 2013 - to introduce the euro on 1 January.

One of those acts set the conversion rate for entry at one euro to 7.53450 Croatian kuna, with Croatia now having a few months to prepare the practicalities for the currency switch.

Croatia, in southeastern Europe, has been a independent country since 1991 when it left then-federal Yugoslavia, which, along with Bosnia's secession a year later, triggering years of devastating war with Serbia.

Neighbouring Slovenia, also a former Yugoslav republic and now EU member, adopted the euro in 2007. Nineteen countries are currently in the euro zone.

Croatia was led by nationalist strongman Franjo Tudjman until his death in 1999 and to qualify as an EU member took steps to fight corruption and improve governance, which included the conviction of Ivo Sanader, prime minister from 2003 to 2009.

Croatian finance minister Zdravko Maric described the EU's green light to adopt the euro as a "big historical day" for his country, whose stunning Adriatic coast is a major tourist destination.

EU economy commissioner Paulo Gentiloni hailed Croatia's imminent entry into the euro zone as an "extraordinary result."

"What an amazing journey it was for Croatia. For my generation, Croatia experienced the first (European) war after the end of the World War (Two)," he said, referring to the 1990s Yugoslav conflict.

To adopt the euro, Croatia had to fulfil criteria of price and exchange rate stability, sound public finances and moderate long-term interest rates, all measured against EU benchmarks.