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The prospects for Croatia’s participation in the European Exchange Rate Mechanism (ERM II) were discussed in Brussels by the Eurozone finance ministers on 9 July, all of whom welcomed Zagreb’s formal bid to join the list candidates who want to adopt the euro as the country’s national currency.
The commitments offered by Croatia in its letter were welcomed by the bloc’s finance ministers at the meeting, the last ahead of the summer break. As officially announced, the ministers welcomed the Croatian authorities’ intention to put in place the necessary elements for successful ERM II membership.
The ministers suggest that “after constructive discussions with the ECB, the Eurozone members, Denmark, and Croatia made a number of commitments in policy areas of major importance for a smooth transition and participation in the ERM II,” according to a written statement by the meetings’ participants who also noted “with regards to the banking supervision, in particular, Croatia has sent a request for close cooperation with the ECB in accordance with current procedures and will undertake the necessary preparations – including to support the ECB’s overall assessment.”
The additional commitments on behalf of Croatia relate to the macro-prudential framework – the framework for combating money laundering, the collection, production and dissemination of statistics, public sector governance and the reduction of the financial and administrative burden.
Efforts towards a stronger financial sector, stronger institutions and public governance and more effective economic structures will contribute to Croatia’s successful participation in ERM II. If successful, Croatia will join both the ERM II and the Banking Union at the same time. The ECB is expected to complete its overall assessment within a year after Croatia’s formal application for close cooperation and its decision may make the start of close cooperation dependent on Croatia’s progress in implementing any measures required in relation to the results of the overall assessment.
Under the relevant secondary legislation, Croatia will also participate in the single decision mechanism (including the Single Decontamination Fund) from the date of entry into force of the ECB’s close cooperation decision.
“From that date, therefore, Croatia should be subject to the obligations arising from the Intergovernmental Agreement on Carriage and the Reciprocal Contribution to the Single Fund, in particular, the obligation to transfer these contributions to the Uniform Remuneration Fund, in accordance with its relevant provisions, “he says. “For these results, Croatia is expected to take all necessary steps to validate and deposit the instrument of ratification in good time before the close cooperation decision comes into force,” it notes.
Croatia is also expected to make further commitments at the time of joining ERM II with a view to achieving a high degree of sustainable economic convergence until the introduction of the euro.