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Croatia could join ERM II in one year - PM Plenkovic

Author Iskra Pavlova
Croatia could join ERM II in one year - PM Plenkovic Photo: All Rights Reserved

ZAGREB (Croatia), June 20 (SeeNews) - Croatia's prime minister Andrej Plenkovic believes the country could join the European Exchange Rate Mechanism II (ERM II), the first formal step towards adopting the euro, in about a year, the government said on Thursday.

"I think we have done a good job on all preconditions [for launching the euro adoption process] and believe we will be supported at the Eurogroup level and later on at other levels when a final decision is being adopted," Plenkovic told reporters in Brussels, according to a government press release.

Plenkovic was speaking after a meeting with the European Commission vice-president for the euro and social dialogue Valdis Dombrovskis in Brussels on Wednesday, the government said.

The prime minister recalled that Croatia has been preparing to enter ERM II in the past year and a half, after the government and the central bank jointly launched the country's euro adoption strategy.

Plenkovic is on a three-day visit to Brussels to participate in the summit of the European People's Party (EPP), the affiliation of his conservative Croatian Democratic Union (HDZ).

In May, Croatia's finance minister Zdravko Maric said that the government plans to launch its bid to join the euro area within two months. The process is expected to take at least four years to complete, including the two-year mandatory stay in ERM II.

Also in May, Croatia formally requested the establishment of close cooperation with the European Central Bank (ECB) on the supervision of the country's banks under the Single Supervisory Mechanism (SSM). Establishing close cooperation on the supervision of banks is part of the steps the country needs to make towards its ERM II entry, the country's central bank has said.

Croatia aims to simultaneously enter into close cooperation with ECB and into ERM II.

ERM II ensures that exchange rate fluctuations between the euro and other EU currencies do not disrupt economic stability within the single market. It also helps non euro-area countries to prepare for joining the euro area. All countries of the euro area participate automatically in the SSM, while EU member states that do not yet have the euro as their currency can choose to participate via establishing close cooperation on banking supervision with the ECB.

The SSM aims to ensure the safety and soundness of the European banking system, to increase its financial integration and stability, as well as to ensure consistent supervision.