Croatia joins Schengen zone, switches to Euro

Zagreb [Croatia], January 1 : Croatia on Sunday adopted the euro currency and enter Europe's passport-free Schengen zone after nearly a decade since joining the European Union, reported Al Jazeera.
At midnight on January 1, 2023, the Balkan nation of some four million people bid farewell to its kuna currency and became the 20th member of the eurozone.
It will also be the 27th nation in the passport-free Schengen zone, the world's largest, which enables more than 400 million people to move freely around its member nations.
"Croatia welcomes the Euro - a significant milestone for citizens and businesses alike, contributing to easier trade and investments, reduced transaction costs and increased financial stability overall," tweeted Croatia in the EU.
Experts say the adoption of the euro will help protect Croatia's economy at a time when inflation has been soaring globally since Russia's invasion of Ukraine in February led to heightened fuel and food prices, reported Al Jazeera.
Croatian officials have defended the decisions to join the eurozone and Schengen, with Prime Minister Andrej Plenkovic saying on Wednesday that they were "two strategic goals of a deeper EU integration".
Notably, Croatians have long valued their most prized assets such as cars and apartments in euros, displaying a lack of confidence in the local currency.
The euro is already largely present in the country. About 80 per cent of bank deposits are denominated in Euros and Zagreb's main trading partners are in the eurozone, reported Al Jazeera.
The Balkan nation is entering the eurozone at a time when the bloc itself is in turmoil as the European Central Bank (ECB) tries to tame inflation after spending the past decade unleashing unprecedented stimulus to rekindle growth when it was exceptionally low.
"We need to be careful that the domestic causes that we are seeing, which are mainly related to fiscal measures and wage dynamics, do not lead to inflation becoming entrenched," ECB President Christine Lagarde told Croatian newspaper Jutarnji list.
Croatia's entry into the Schengen borderless area will also provide a boost to the Adriatic nation's key tourism industry, which accounts for 20 per cent of its gross domestic product (GDP).
However, border checks will end only on March 26 at airports due to technical issues, reported Al Jazeera.
Croatia will still apply strict border controls on its eastern frontier with non-EU neighbours Bosnia and Herzegovina, Montenegro and Serbia.
The fight against illegal migration remains the key challenge in guarding the EU's longest external land border at 1,350km (840 miles), reported Al Jazeera.