ZAGREB, Jan 18 ― Croatia's prime minister urged people yesterday to put cash they keep at home into banks to facilitate the switch from the kuna to the euro, which the Balkan nation expects will happen in a year.
Prime Minister Andrej Plenkovic said prices will be displayed in both kunas and euros from September ahead of the introduction of the single currency, which the government hopes will happen next January.
“We urge people who have cash at home to put it now in banks since the savings in kunas will be automatically converted into euros,” he said.
Croatia joined the European Union in July 2013, but like other new members from eastern Europe, has taken some time to fulfill the economic conditions to adopt the single European currency.
The government wants the switch to be “simple and without costs for citizens,” Plenkovic said while presenting a bill on adopting the euro.
Due to lack a longstanding lack of trust in institutions and banks many Croatians keep their savings in cash at home.
Officials repeatedly stress the benefits of introducing the euro, in particular that it will lower borrowing costs and boost foreign investment into the country, as well as eliminate currency risks with its main trading partners.
Around 80 per cent of bank deposits are already in euros.
But many Croatians fear that the introduction of the euro will lead to a hike in prices, in particular that businesses will round up prices when they convert into euros.
Finance Minister Zdravko Maric called it “one of the most important issues”.
He urged “everyone to make sure that there is no unjustified price increase ... no shady stuff”.
An Eurobarometer survey last year showed that 61 per cent of Croatians support the switch to the euro.
Out of the 27 EU member states, 19 currently use the euro as their currency.
Croatia's tourism-oriented economy remains one of the EU's weakest.
In October, the average salary was €952 (RM4,543). ― AFP
