The Euro – only legal tender in Croatia

Published: 20/1/2023
The main part of the euro changeover process ended smoothly, in line with the plan and without major difficulties

During the frontloading period banks were supplied with a total of EUR 1.3 billion, which includes the value of euro coin starter kits. The Croatian National Bank ensured a total of 627 million pieces of euro coins in 2022 and 346 million pieces of euro banknotes for the purpose of frontloading in 2022 and partly for supply in 2023. By 31 December 2022, banks received some 388 million pieces of euro coins (including coin starter kits) and some 62 million pieces of euro banknotes. For the purpose of regular supply to banks in 2023, the Croatian mint will produce some additional 210 million pieces of euro coins. To make the changeover process easier for citizens and business, it was possible to buy euro coin starter kits. Thus, from 1 to 31 December 2022 some 861,226 euro coin starter kits were sold to citizens at altogether 2000 locations of bank outlets, Financial Agency offices and offices of the HP-Hrvatska pošta d.d., as well as 37,281 starter kits to business entities.

Drawing on the experience of countries that have already adopted the euro as their national currency, the CNB expects that some 1.1 billion pieces of kuna coins and more than 500 million pieces of kuna banknotes will be returned during the changeover, including the currency reserves of the CNB.

After withdrawal, kuna coins will be kept safe in a prefabricated warehouse building in the military compound Croatia in Zagreb until the expiry of the three-year period designated for exchange, after that they will be sold as secondary raw material. After being withdrawn from circulation kuna banknotes will be destroyed in kuna banknote processing systems equipped with the shredding and counting equipment. The necessary storage for withdrawn kuna banknotes has been ensured within the CNB's vaults.

As at 19 January 2023, the Croatian National Bank had some 326 million kuna banknotes stored at its vault (65% of the estimated quantity), while 443 million pieces of kuna coins (40% of the estimated quantity) were housed at the Croatia military compound.

ATMs successfully adjusted, kuna coins to be exchanged until end-2025

In line with regular seasonal oscillations, there were some 4,000 bank-owned ATMs active in December last year. Of which, some 2,700 (68%) were gradually shut down to be adjusted, loaded with euro and put back in operation by 1 January 2023. The remaining, approximately 1,300 (32%) ATMs were adjusted to euro operations in the first two weeks of the new year. For citizens to be able to quickly and easily find ATMs in operation, on 15 December 2022, the Croatian Banking Association published an interactive map of ATMs, providing information where kuna withdrawal was possible and as of 1 January this map featured all bank ATMs at which euro could be withdrawn. Due to the reduction in the number of operational ATMs, banks decided not to charge fees for ATM withdrawals via debit cards by persons who are not their clients in the period from 15 December 2022 to 15 January 2023, thus considerably simplifying the process and making it easier for all users to find and use the closest ATM.

Further, banks, the Financial Agency (Fina) and HP-Hrvatska pošta d.d. (Croatian post) will exchange kuna cash for euro cash at the fixed conversion rate for a period of 12 months from the adoption of the euro, that is, from 1 January 2023 to 31 December 2023. During this period, a maximum of 100 banknotes and 100 kuna coins can be exchanged free of charge. In most cases, banks do not charge a fee, while Fina and the Croatian post do. After 1 January 2024, the exchange of kuna banknotes and coins will be possible only at the Croatian National Bank, free of charge. It will be possible to exchange kuna banknotes for an unlimited period, while kuna coins will be accepted to be exchanged only in the period of three years after the adoption of the euro, that is, until 31 December 2025. We would also like to remind the public that during 2023, kuna coins and banknotes will not be exchanged at the Croatian National Bank, and we would like to stress that during 2023 citizens can exchange kuna cash for euro cash at the fixed exchange rate at banks by depositing kuna to their accounts.

Timely adjustment of banks' IT systems

The changeover from kuna to euro operations was a complex process that required substantial changes to banks' IT systems. All adjustments needed to be extensively tested and adjusted to external systems to which banks' IT systems are connected (payment systems, ATM networks, POS networks, mobile app stores, etc.). The key priority was to preserve data integrity (especially client balances), which were not to be put into jeopardy at any time.

Considering the demanding nature and complexity of these adjustments of banks' systems relating to the introduction of the euro, some banking and financial services were not available during the conversion weekend. However, although bank outlets, and internet and mobile banking were not operational during this time, citizens were able to use their payment cards during the most of the time. All banks continued their operation on Monday 2 January 2023 in accordance with their euro changeover plans, of which they notified their clients ahead of time.

As of November 2021, the CNB's supervisory activities were focused on and closely monitored the progress in the introduction of the euro and the adjustment status of banks' IT systems through a monthly reporting system, as well as undertook the necessary supervisory activities directed at banks, key service providers and other involved parties. In accordance with the statutory provisions, no consumer should be placed in a financially less favourable position than they would have been in had the euro not been introduced, which the CNB ensured through intensive supervisory activity and will continue to ensure by controlling the conversion process, especially when it comes to consumer loans. In addition, as of 1 January 2023, all entities under the CNB's supervision (banks, credit unions, electronic money institutions and payment system institution) converted their charges to euro without increasing them, that is, by applying the recalculation and rounding rules.

Changes in the payment system

At the end of the accounting day on 30 December 2022, the Croatian Large Value Payment System (CLVPS), the payment system for the settlement of interbank payments in kuna in real time on a gross basis, in central bank money, ceased its operation. The kuna balances at accounts of banks and other CLVPS participants were converted to euros and transferred to the euro accounts of these participants in the TARGET2-HR system (the Croatian component of the TARGET2 system – Trans-European automated real-time gross settlement express transfer system). The TARGET2-HR payment system will thus replace the CLVPS and will be used for interbank payments in euro, in central bank money, to execute monetary operations, execute payments for transactions executed through the CDCC and the CDCC CSD, enable supply of banks with cash, etc.

The National Clearing System (NCS) for the clearing of interbank payment transactions in kuna stopped operating on the same day. All credit transfers and direct debits that were, up to that point, cleared in kuna in the NCS, continued to be cleared in euro as of the 1 January 2023 in the EuroNCS payment system for the clearing of national and cross-border SEPA credit transfer and SEPA direct debit payment transactions, which started operating back in 2016.

As from 1 January 2023, instant payments that were settled in kuna in the NCSInst (payment system for the settlement of interbank payment transaction in almost real time) were continued according to the same rules in euro as SEPA Instant credit transfer, in the same payment system, which was, as of 1 January 2023, renamed EuroNCSInst.

The providers of payment services carried out the conversion of balances in the payment accounts of their users and completed all adjustments in order to be able to provide the service of managing accounts, as well as all other payment services in euro as the national currency of the Republic of Croatia.