Since the adoption of the euro, the standard of living in Croatia has risen. This was stated by the governor of the Croatian National Bank, Boris Vujicic, in Sofia, a BGNES reporter reported.
In the parliamentary committee on the European Union, Schengen, and Eurozone issues today, Vujicic presented Croatia's experience of adopting the common currency, its benefits, economic growth, and inflation levels after joining the Eurozone.
He noted that the most difficult of the criteria for Croatia was related to inflation.
"Inflation should be equal to the average level of the three countries with the lowest inflation, plus 1.5 points. We were slightly above the EU average," added the governor of the Croatian National Bank, pointing out that in their case the average inflation of The EU was 4.7% and that was the base they had to step on to meet the criteria.
Vujicic also highlighted the changes in the laws, as well as the transformation of loans and deposits. "It's a massive project that we had to do," he said, adding that the cash change also required a significant effort.
Together with the army, they decide exactly how to store and replace the banknotes in the vault.
"All kuna that were withdrawn were placed in these warehouses and were sold as goods. We worked very closely with the police and with Armenia both in terms of kuna and euro banknotes," Vujicic clarified and emphasized that among the requirements before joining the Eurozone, all companies had to publish their prices in kuna and euro. According to him, all this was quite well received by the public, noting that the information campaign was very key in the introduction of the euro.
"The information campaign helped us to let people know that they don't have to wait for the introduction of the euro," he pointed out.
The governor of the Croatian National Bank emphasized that 60% of the cash was transferred to commercial banks before January 1. "After that, we continued to convert notes, but the pace was very low," he said.
Vujicic also commented on the preparation of the banking system.
"There was 2 weeks that was quite tense for retailers. But everything went right. There were no incidents, no technical problems with the changeover to the euro," he added.
On the key issue related to prices, the governor of the Croatian National Bank said that there were people "for" and "against" the euro, and many of them expected a rise in prices. "The experience of other countries indicates that one of the impacts of the introduction of the euro is between 0.2 - 0.4% difference in prices. The impact for Croatia is 0.2% in the price difference," he pointed out.
Vujcic added that in many cases prices rose mainly in services such as coffee shops and hair salons, but the difference was 0.2 percentage points.
"In Croatia, things are no different than in other countries that are switching to the euro. Most likely, it will be the same in Bulgaria with a minimal difference," he predicted.
Vujicic noted that public support was relatively high for the introduction of the euro. "For September 2022 to February 2023, two-thirds of people support, one-third - no. After the introduction of the euro, this support did not decrease, it even increased. 51% have a positive opinion, we expect support to increase," he also said.
In connection with the elimination of the risk of foreign currency exchange, the governor of the Croatian National Bank specified that in the case of Bulgaria, there is no such risk because you have a currency board.
Regarding loans for households, he explained that in Croatia they are currently lower than those in Europe. "Currently, if you take a loan from Croatia, you will see that it is lower than Germany," Vujcic said, adding that costs in Croatian companies are also currently lower than in the Czech Republic, Poland, and Hungary. who does not want to accept the euro?
Transaction costs are the third benefit. "We should not spend money on currency conversion. Of course, there is a law for exchange offices and banks, and in this case, they are the losers, but this is the situation," he announced.
All deposits, Vujicic also said, are now in euros, and if a financial crisis occurs, it will be much easier for us to manage it.
Croatia's credit rating immediately rose after adopting the euro.
"There is a requirement to have a reserve, and due to the improvement of liquidity, inflation in Croatia is currently lower than in the Eurozone," Vujicic also said and specified that if the euro is the reason for the increase in inflation, then Croatia should now have higher inflation than the Czech Republic, Hungary and Poland, and this is not the case.
According to him, people always look at the cumulative effect of inflation, not what the statisticians handle. "The impact on GDP is not negative," he said and pointed out that Bulgaria has no problems with the fiscal balance.
He drew attention to the fact that many countries have problems with public debt, and Bulgaria will be welcome in the Eurozone because it has no problems with this requirement.
The Governor of the Croatian National Bank explained that the preparation for joining the Eurozone requires a strong commitment in this process, as well as detailed planning with relevant stakeholders.
"It is very important to display the prices in euros and in the local currency," Vujicic said categorically and addressed the members of the commission with the words: "You must state clearly that the introduction of the euro will not lead to price manipulation. You must explain to people the benefits, but also to explain the concertation of cash".
Croatia, Vujicic also said, managed to convert 60% of cash before the adoption of the euro.
The Minister of Finance Asen Vasilev said for his part that Bulgaria is following the criteria and has already fully fulfilled three of the four criteria. He expressed hope that Bulgaria will become the 21st member country of the Eurozone in 2025.
The Governor of the Bulgarian National Bank (BNB) Dimitar Radev also stated that Bulgaria is in the process of fulfilling the criteria.
"Regarding inflation, we do not need to repeat things that we have repeatedly said. Nothing different will happen in Bulgaria either," he said and pointed out that security in crisis conditions is another very important factor, as well as that in our country the currency risk is minimized.
Vujicic also commented on the increase in income. "The standard of living has risen amid the adoption of the euro," he pointed out, adding that this is because incomes have outpaced inflation and Croatia ranks first in the EU in terms of income growth. /BGNES
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