Europe News

Amid debt crises and raging protectionism, there’s still a country that badly wants to join the euro

Key Points
  • The governor of Croatia's National Bank believes the country will be better off by joining the Eurozone's single currency.
  • The country is currently ineligible due to its high public debt levels.
  • Boris Vujcic believes the growing economy will soon bring the country within EU guidelines.
Joining the euro would have little cost for Croatia: National bank governor

The governor of the Croatian National Bank is confident that joining the euro zone's single currency will be a good bet for a country that's on a steady growth trajectory.

Boris Vujcic told CNBC Tuesday said that joining the EU had given the country a much-needed boon in the aftermath of the European debt crisis and that it now wants to press ahead with full integration into the euro zone with the adoption of the euro.

The stance is at odds with some commentators who believe the joint currency has failed many of its smaller Mediterranean members, but Vujcic said that Croatia's financial ties with its neighboring countries means that it is better in than out.

"When you look at the euro zone prospects of Croatia, one has to bear in mind that Croatia is a heavily euro-dependent economy anyway – about three quarters of savings in Croatian banks are in euros," he said on the side lines of a joint conference with the International Monetary Fund (IMF) in Dubrovnik.

Marin Tomas | Getty Images

"Once you are heavily euro-dependent you have very little room for manoeuvre to play with the exchange rate and you still have a foreign exchange risk in your interest rate. In our view, joining the euro would eliminate that risk and have very little cost for Croatia."

Joining the group won't be without its challenges, however. Croatia's public debt level is 84 percent, well above the 60 percent threshold required of euro zone partners.

Vujcic claimed that this gap is continuing to fall as gross domestic product (GDP) growth continues to tick up to around 3 percent.

Croatia, the EU's youngest member, is to hold a public discussion this fall to assess public sentiment towards joining the euro, though Vujcic refused to set a timeframe for final membership.

"We have to see what the position is of the public, of the politics, and then if everyone agrees it's a worthwhile goal we're going to move to that goal gradually, without any dates," he said.

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