Historic new year for Croatia as it joins euro, Schengen area

Source: The post is based on the article “Historic new year for Croatia as it joins euro, Schengen area” published in TOI on 30th December 2022

What is the News?

From 1st January 2023, Croatia has switched to the European currency – the euro –  and joined Europe’s border-free Schengen zone.

Note: Croatia entered the EU in 2013. It becomes the 27th country to join the Schengen area and the 20th to adopt the euro currency.

What is the Euro area?

Euro area or ‘eurozone’ is a bloc of the member states of the European Union (EU) that have replaced their national currencies with a single currency – the euro.

To become a member of the euro area, an EU nation has to meet the convergence criteria – economic and legal conditions such as low inflation, and a stable exchange rate, among others.

Currently, the euro (€) is the official currency of 20 out of 27 EU member countries.

How will Croatia benefit from joining the Eurozone?

Croatia becoming a member of the euro area will help the nation to protect its economy amid soaring inflation in the wake of the Russian war in Ukraine.

Note: This is the first expansion of the eurozone in almost eight years after Lithuania joined it in 2015.

What is the Schengen zone?

Schengen Area signifies a zone where European countries abolished their internal borders for the free and unrestricted movement of people.

It includes 22 of the EU’s 27 states as well as Norway, Switzerland, Iceland and Liechtenstein.

With Croatia joining the Schengen zone, the Croatians would now be able to move freely around the Schengen member countries and would not be required to show their passports while travelling.