At the request of Croatia, the finance ministers of the euro area member states, the President of the European Central Bank, the finance ministers and central bank governors of Denmark and Croatia have decided, by mutual agreement, to include the Croatian kuna in the ERM II. The decision is the result of the procedure which included the participation of the European Commission and consultations with the Economic and Financial Committee.
The central rate of the Croatian kuna is set at 1 euro = 7.53450 kuna, which is the ECB's reference rate for today.
The Croatian kuna will participate in the ERM II within the standard fluctuation band of ± 15 percent of the central rate. The compulsory intervention rates will be published on Monday, 13 July 2020, in time for the opening of the foreign exchange markets.
Croatia has successfully implemented the measures to which it committed in the letter of intent on participation in the ERM II from July 2019: further strengthening of banking supervision, development of the macro-prudential policy framework, strengthening of the anti-money laundering framework, improving the collection, production and dissemination of statistics, enhancing public sector governance and reducing the administrative and financial burden on the economy.
With the aim of achieving a high degree of sustainable economic convergence and a successful participation in the euro area, Croatia has committed to implement additional measures in reform areas and expressed its firm intention to adopt the euro, once the convergence criteria are met. These measures pertain to the strengthening of the anti-money laundering framework, reducing the administrative and financial burden on the economy through further simplification of administrative procedures and decreases in parafiscal and non-tax charges, improved governance of state-owned enterprises and strengthening the national insolvency framework.
The ECB today also adopted the decision on the establishment of close cooperation with the CNB, by which the CNB has become a part of the SSM even before Croatia’s joining the euro area, which means that the ECB is taking over the supervision of Croatian banks. The decision on close cooperation will enter into force 14 days after it is published in the Official Journal of the European Union. In the forthcoming period, the ECB will carry out its assessment and decide which Croatian banks meet the criterion to be classified as significant institutions. From 1 October 2020, the ECB will also exercise direct supervision of significant institutions in the Republic of Croatia.
With the establishment of close cooperation, CNB's experts will become members of the ECB's Joint Supervisory Teams (JTSs) and exercise direct supervision of significant institutions in the Republic of Croatia. Less significant institutions will be supervised by the CNB on behalf of the ECB. The CNB will also have its representative in the ECB's highest supervisory decision-making body, having equal rights and obligations as other members, as well as a voting right.
From the date of the entry into force of the ECB's decision on close cooperation, the Republic of Croatia will also participate in the Single Resolution Mechanism (SRM).
"We are proud that Croatia is joining the SSM and the SRM, thus becoming a member of the banking union even before the country joins the eurozone, and that it contributes a diligently supervised and well capitalised banking system to the banking union," CNB Governor Boris Vujčić said on the occasion of establishing close cooperation between the CNB and the ECB.