The Impact of the Introduction of the Euro in Croatia
Croatia, the newest member of the European Union, is set to introduce the euro as its currency in January 2023. Although it was announced that Croatia had fulfilled the Maastricht criteria for monetary union membership in May 2022, the country did not meet the criterion on the general government debt rate. This paper analyses Croatia’s readiness to join the euro area beyond meeting the Maastricht criteria. While monetary union membership has its positive sides, by joining, a country loses one of the most important tools of managing its economy – monetary policy. If the economy is strong and competitive enough, with efficient institutions and stable fiscal policy, the loss of monetary policy can be mitigated. However, Croatia’s decision to join the euro area is hasty, as if the country just wanted to join a prestigious club. This lack of preparedness could have major negative effects on one of the least competitive economies in the EU.