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Central Bank Head Says Kuna and Euro Should be Pegged

The head of the Croatian Central Bank, Boris Vujcic has said that the country’s currency should be pegged to the euro.

He said that the peg would maintain stability for the currency and there would be no exchange rate risk.

Vujcic said this risk will only be completely eliminated when the country eventually joins the euro.

Euro in Five Years?

 

He believes euro entry will happen within the next five years. However, many would be doubtful that it can be achieved in such a short period. All countries who join must abide by a number of strict conditions, including the country being inside the Exchange Rate Mechanism ERM-2 for two years.

Croatia are the newest EU member state, joining in 2013. All new member must pledge to adopt the euro, however, no timeline is ever set.

Vujcic added that the exchange rate risk does not exist for many in Croatia. However, it exists significantly for those in manufacturing who have large imported input costs, and for those who have loans denominated in euros. Many of the country’s mortgages have been taken out in Swiss francs and in euros.

Boris Vujcic

 

Vujcic has been the governor of the Croatian National bank since July 2012.

Prior to that he had been a Professor of Economics at the University of Zagreb, and was Vice Governor of the Croatian National Bank from 2000.

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