Croatia Prepared for Euro Adoption, While Romania Fails to Fulfill European Commission's Standards
Croatia is set to officially adopt the Euro on January 1, 2023, following its successful fulfillment of all Maastricht convergence criteria. These criteria include price and exchange rate stability, sound public finances, and moderate long-term interest rates [1][2][5].
Croatia has participated in the European Exchange Rate Mechanism (ERM II) with its kuna since July 10, 2020, and has demonstrated exchange rate stability during this period [1]. The country's designs for euro coins have also been validated by the EU Council [4].
In contrast, Romania's euro adoption plans are facing delays. The country has not yet met all the convergence criteria, primarily due to issues with price stability, exchange rate stability (participation and stability in ERM II for at least two years), public finances, and moderate long-term interest rates [2].
Romania has not yet joined ERM II, which is a mandatory step before adopting the euro. Non-eurozone EU member states can delay joining ERM II, thus postponing euro adoption [2]. In 2021, Romania's deficit was 7.1% of GDP, while the EU average deficit was 4.7% [6].
The economic impacts of the COVID-19 pandemic and the invasion of Ukraine by Russia have significantly affected the assessment of convergence, particularly the criterion of price stability [8]. Inflation in the Eurozone is expected to reach 6.1% in 2022 and fall to 2.7% in 2023 [7].
Sweden, another non-eurozone EU member state, did not meet the exchange rate criterion for adopting the euro, as the krona appreciated by nearly 8% against the euro between April 2020 and November 2021 [3]. However, Sweden met the price stability criterion for adopting the euro, with an average inflation rate of 3.7% over the 12 months preceding April 2022 [3].
The European Commission's convergence report serves as the basis for the EU Council to decide whether a member state meets the criteria to join the eurozone. The European Central Bank estimates that Croatia respects the reference values of the convergence criteria, paving the way for its adoption of the currency in January 2023 [4]. The council will make the final decisions on Croatia's adoption of the euro during the first half of July [4].
| Criteria | Croatia (2023) | Romania (2025) | |------------------------------|---------------------------------------|---------------------------------------| | Price stability | Met | Not fully met | | Exchange rate stability (ERM II participation) | Participated and stable | Has not yet joined ERM II | | Public finances (budget deficit, debt) | Met | Not fully met | | Long-term interest rates | Moderate, compliant | Not fully compliant | | Formal EU commitment | Required and fulfilled | Required but conditions pending |
Sources: [1] European Commission, "Croatia: 2022 Convergence Report" (2022), https://ec.europa.eu/info/publications/croatia-2022-convergence-report_en [2] European Commission, "Convergence Report: Assessment of the Convergence of the Member States with Regard to the Adoption of the Euro" (2022), https://ec.europa.eu/info/publications/convergence-report-assessment-convergence-member-states-regard-adoption-euro_en [3] European Central Bank, "Sweden's Convergence Assessment" (2022), https://www.ecb.europa.eu/pub/pdf/other/sweden202205en.pdf [4] European Council, "Draft Conclusions on the Adoption of the Euro by Croatia" (2022), https://www.consilium.europa.eu/media/44106/st13706-en22.pdf [5] European Commission, "Croatia Participates in the European Exchange Rate Mechanism" (2020), https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1858 [6] European Central Bank, "Government Finance Statistics for the European Union and the Euro Area" (2022), https://www.ecb.europa.eu/stats/govfin/html/index.en.html [7] European Commission, "Spring 2022 Economic Forecast: Economic Developments and Prospects in the European Union" (2022), https://ec.europa.eu/info/publications/spring-2022-economic-forecast_en [8] European Commission, "Impact of the COVID-19 pandemic on the economic and financial situation and the convergence of the Member States" (2021), https://ec.europa.eu/info/publications/impact-covid-19-pandemic-economic-and-financial-situation-and-convergence-member-states_en
- Croatia's successful fulfillment of the Maastricht convergence criteria, including exchange rate stability, sound public finances, and moderate long-term interest rates, has enabled it to join the ranks of the eurozone on January 1, 2023.
- Meanwhile, Romania's plans to adopt the euro are facing delays, as it has yet to meet all the convergence criteria related to price stability, exchange rate stability, public finances, and moderate long-term interest rates.
- In contrast to Romania, Sweden, while not meeting the exchange rate criterion, has fulfilled the price stability criterion, paving a potential path for its future adoption of the euro, pending other convergence criteria and formal EU commitments.
