Proposal for a COUNCIL REGULATION amending Regulation (EC) No 974/98 as regards the introduction of the euro in Croatia
Date: 2022-06-01
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: Croatia, Economic and Monetary Union, Euro Group (euro area), economic convergence, euro, monetary union, participating country (euro area)

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   EUROPEAN COMMISSION  Brussels, 1.6.2022  COM(2022) 281 final 2022/0178 (NLE)  Proposal for a COUNCIL REGULATION amending Regulation (EC) No 974/98 as regards the introduction of the euro in Croatia  
 
EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

On  1  June  2022,  the  Commission  released  a  proposal  for  a  Council  Decision  in 
accordance  with  Article  140(2)  of  the  Treaty  on  the  Functioning  of  the  European 
Union (‘the Treaty’), indicating that Croatia fulfils the necessary  conditions  for the 
adoption of the euro and that the derogation of Croatia is abrogated with effect from 
1 January 2023. 

In  the  event  of  a  positive  decision,  the  Council  will  subsequently  have  to  take  the 
other measures necessary for the introduction of the euro in Croatia. 
Council  Regulation  (EC)  No  974/98  on  the  introduction  of  the  euro1  governs  the 
initial  introduction  of  the  euro  in  the  first-wave  euro-area  Member  States  and 
Greece2. That Regulation was amended by: 

- Regulation (EC) No 2169/2005, in order to prepare for future enlargements of the 
euro area 

-  Regulation  (EC)  No  1647/2006,  to  cover  Slovenia  (which  adopted  the  euro  on  1 
January 2007) 

-  Regulation  (EC)  No  835/2007,  to  cover  Cyprus  (which  adopted  the  euro  on  1 
January 2008)  

-  Regulation  (EC)  No  836/2007,  to  cover  Malta  (which  adopted  the  euro  on  1 
January 2008)  

-  Regulation  (EC)  No  693/2008,  to  cover  Slovakia  (which  adopted  the  euro  in 
January 2009) 

- Regulation (EU) No 670/2010, to cover Estonia (which adopted the euro in January 
2011) 

- Regulation (EU) No 678/2013, to cover Latvia (which adopted the euro in January 
2014) 

-  Regulation  (EU)  No  827/2014,  to  cover  Lithuania  (which  adopted  the  euro  in 
January 2015). 

For  Croatia  to  also  be  covered  by  Regulation  (EC)  No  974/98,  a  reference  to  this 
Member  State  needs  to  be  added  to  that  Regulation.  This  proposal  contains  the 
necessary amendments to that Regulation. 

Croatia's  National  Euro  Changeover  Plan  specifies  that  the  ‘big  bang’  scenario 
should be applicable, i.e. that the adoption of the euro as the currency of Croatia and 
the introduction of euro banknotes and coins in Croatia should coincide. 

2. 

RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND 
IMPACT ASSESSMENT 

Discussions  with  Member  States  on  economic  policy  challenges  in  Member  States 
are  held  under  various  headings  on  a  regular  basis  in  the  Economic  and  Financial 

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OJ L 139, 11.5.1998, p. 1. 
Cf. Council Regulation (EC) No 2596/2000 of 27 November 2000 amending Council  Regulation (EC) 
No 974/98 on the introduction of the euro (OJ L 300, 29.11.2000, p, 2). 

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Committee  (EFC)  and  the  ECOFIN/Eurogroup.  These  include  informal  discussions 
on  issues  specifically  relevant  to  the  preparation  of  eventual  euro  area  entry 
(including  exchange  rate  policies).  Dialogue  with  academics  and  other  interested 
groups takes place conferences/seminars and on an ad-hoc basis. 

Economic developments in the euro area and the Member States are assessed through 
the  various  procedures  of  economic  policy  coordination  and  surveillance  (notably 
under Art. 121 of the Treaty), as well as in the context of the Commission’s regular 
monitoring and analysis of country-specific and area-wide developments  (including 
forecasts, regular publication series, and input to the EFC and ECOFIN/Eurogroup). 
In  accordance  with  the  proportionality  principle  and  in  line  with  past  practice,  no 
formal impact assessment is necessary. 

3. 

LEGAL ELEMENTS OF THE PROPOSAL 

3.1. 

Legal basis 

The legal basis for this proposal is Article 140(3) of the Treaty, which allows for the 
adoption  of  the  other  measures  necessary  for  the  introduction  of  the  euro  in  the 
Member  State  the  derogation  of  which  has  been  abrogated  under  Article  140(2)  of 
the Treaty. 

The Council shall act with the unanimity of the Member States whose currency is the 
euro and the Member State concerned, on a proposal from the Commission and after 
consulting the ECB. 

3.2. 

Subsidiarity and proportionality 

The  proposal  falls  under  the  exclusive  competence  of  the  Union.  The  subsidiarity 
principle therefore does not apply. 

This  initiative  does  not  go  beyond  what  is  necessary  to  achieve  its  objective  and, 
therefore, complies with the proportionality principle. 

3.3. 

Choice of legal instrument 

A  Regulation  is  the  only  appropriate  legal  instrument  for  amending  Council 
Regulation (EC) No 974/98 on the introduction of the euro. 

4. 

BUDGETARY IMPLICATION 

The proposal has no implications for the budget of the Union. 

5. 

COMMENTARY ON INDIVIDUAL ARTICLES  

5.1. 

Article 1 

In  accordance  with  Article  1  lit.  (a)  and  with  Article  1a  of  Regulation  (EC)  No 
974/98,  the  table  in  the  Annex  to  that  Regulation  lists  the  participating  Member 
States  and  defines  the  euro  adoption  date,  the  cash  changeover  date,  and  the 
‘phasing-out’ period, if applicable, for all these Member States. 

According to Article 1 lit. (i) of Regulation (EC) No 974/98, a ‘phasing-out’ period 
can  only  apply  to  Member  States  where  the  euro  adoption  date  and  the  cash 
changeover date fall on the same day. This was not the case for the eleven Member 
States  that adopted the euro on 1 January 1999,  nor for  Greece, which adopted the 
euro on 1 January 2001. 

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Slovenia,  Cyprus,  Malta,  Slovakia,  Estonia,  Latvia  and  Lithuania’s  euro  adoption 
date  and  cash  changeover  date  coincided  (1  January  2007  for  Slovenia,  1  January 
2008 for Cyprus and Malta, 1 January 2009 for Slovakia, 1 January 2011 for Estonia, 
1 January 2014 for Latvia, 1 January 2015 for Lithuania), but the countries chose not 
to have a ‘phasing-out’ period. 

Also  Croatia's  National  Euro  Changeover  Plan  sets  the  same  date  for  the  euro 
adoption  date  and  for  the  cash  changeover  date  (1 January  2023),  and  Croatia  has 
chosen not to have a ‘phasing-out’ period. 

This  Article  adds  Croatia  and  the  following  relevant  data  for  this  Member  State  to 
the table in the Annex to Regulation (EC) No 974/98 in protocol order. 

Member State 

Euro adoption date 

Cash changeover date 

Member State with a 
‘phasing-out’ period 

‘Croatia 

1 January 2023 

1 January 2023 

No’ 

5.2. 

Article 2 

This Article sets the date of entry into force of the Regulation as 1 January 2023, ensuring that 
it  will  be  applicable  in  conformity  with  the  timing  of  the  other  Council  acts  relating  to  the 
adoption of the euro by Croatia, i.e. the date of on which the derogation is abrogated and the 
date on which the conversion rate for the Croatian kuna enters into force. 

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2022/0178 (NLE) 

Proposal for a 

COUNCIL REGULATION 

amending Regulation (EC) No 974/98 as regards the introduction of the euro in Croatia 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 140(3) thereof, 

Having regard to the proposal from the European Commission, 

Having regard to the opinion of the European Central Bank, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

Council Regulation (EC) No 974/98 (3) provides for the substitution of the euro for the 
currencies  of  the  Member  States  which  fulfiled  the  necessary  conditions  for  the 
adoption  of  the  euro  at  the  time  when  the  Community  entered  the  third  stage  of 
economic and monetary union. 

According to Article 5 of the 2012 Act of Accession, Croatia is a Member State with a 
derogation,  as  defined  in  Article  139(1)  of  the  Treaty  on  the  Functioning  of  the 
European Union (the ‘Treaty’). 

Pursuant to Council Decision 2022/…/EU of … … 2022 on the adoption by Croatia of 
the  euro  on  1 January  2023  (4),  Croatia  fulfils  the  necessary  conditions  for  the 
adoption of the euro and the derogation in  favour of  Croatia is  to  be abrogated with 
effect from 1 January 2023. 

The introduction of the euro in Croatia requires the extension to Croatia of the existing 
provisions  on  the  introduction  of  the  euro  that  are  set  out  in  Regulation  (EC)  No 
974/98. 

Croatia's  National  Euro  Changeover  Plan  specifies  that  euro  banknotes  and  coins 
should become legal tender in that Member State on the day of the introduction of the 
euro  as  its  currency.  Consequently,  the  euro  adoption  date  and  the  cash  changeover 
date shall be 1 January 2023. No ‘phasing-out’ period should apply. 

(6) 

Regulation (EC) No 974/98 should therefore be amended accordingly, 

HAS ADOPTED THIS REGULATION: 

The Annex to Regulation (EC) No 974/98 is amended by inserting the following row in the 
table between the entries for France and Ireland: 

Article 1 

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Council  Regulation  (EC)  No  974/98  of  3  May  1998  on  the  introduction  of  the  euro  (OJ  L  139, 
11.5.1998, p. 1). 
OJ L […], […], p. […]. 

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‘Croatia 

1 January 2023 

1 January 2023 

No’ 

This Regulation shall enter into force on 1 January 2023. 

Article 2 

This Regulation shall be binding in its entirety and directly applicable in all Member States.  

Done at Brussels, 

For the Council 
The President 

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