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Croatia to send letter of intent to join ERM II on Thursday

Author Iskra Pavlova
Croatia to send letter of intent to join ERM II on Thursday Photo: All Rights Reserved

ZAGREB (Croatia), July 4 (SeeNews) - Croatia will be sending on Thursday a letter of intent to join the European Exchange Rate Mechanism II (ERM II), the first formal step towards adopting the euro, prime minister Andrej Plenkovic said.

"We had a meeting of the national council for adopting the euro yesterday and today [finance] minister Maric and [central bank] governor Vujcic will send the letter of intent, along with the action plan, as agreed with the European Commission and during the ongoing negotiations with the European Central Bank, that Croatia plans to implement in the coming year," Plenkovic said at the opening of the regular weekly meeting of the cabinet.

A video file of Plenkovic's statement has been uploaded on the government's website.

Last month, Plenkovic told reporters in Brussels he believes that Croatia could join ERM II in about a year.

The whole process of joining the euro area is expected to take at least four years to complete, including the two-year mandatory stay in ERM II.

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 on the path to ERM II entry, Croatia's central bank has said.

Croatia has said it 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.