the issue of perceived inflation, in contrast to the reality, was also apparent in slovenia, just as it had been in the first wave countries. here slovenia did not fully succeed where others had failed, and thus did not avoid the perceived inflation rate from being higher than the actual rate during the changeover. the perception that some retailers saw the introduction of the euro as an opportunity to put up prices remained. and while this certainly happened in some instances, the statistical evidence shows that this was more the case for services than for goods, although consumers did not make that distinction. i must admit i do not know what the expectations are for inflationary pressures in croatia with the adoption of the euro, so i can only hope that the authorities have managed to combat idea that the introduction of the euro is inflationary. it is a statistical 2 / 6 bis - central bankers'speeches fact that the effect of adopting the euro on inflation was just 0. 3 % points in slovenia, even though public perceptions might have been very different. for a comparison, the introduction of vat in 1999 had significantly stronger effect on inflation, up 2. 5 % points in the first year. turning to a more topical consequence of adopting the euro, this development will further increase croatia's integration with the eu, even though the country had already de facto lost its sovereign monetary policy well before this. this implies that despite a remaining idiosyncratic component, the overall monetary policy will be the same for croatia as it is for other economies in the monetary union. there is a question, of course, of how such economic policies will react to the specific situation in croatia. what we found in these last 15 years in slovenia is that the euro is in fact a good anchor in terms of inflationary pressures. nevertheless, a common monetary policy does constrain the economic policy spectrum, and many, including in the general public, might argue that with the adoption of a single currency an important part of national sovereignty is lost. this is in a way true, but, to be honest, a small open economy cannot act as if it were an isolated island, even if it has its own monetary policy. in reality, however, there are still some economic policies at the disposal of national authorities, some also at the disposal of national central banks, which can be used to help smooth local economic cycles. let me focus next on two sets of policies, macroprudential and fiscal. the experience of the first 20 years of economic

recent months, where the impact of the euro on prices has been additionally blurred by globally high inflation. the croatian national bank has made good use of advances in technology and methodology. using website price scraping, allowed them to more accurately assess the short - term impact of the euro on consumer prices. as you will soon hear, findings for croatia are not so different from slovenia's. * * * to sum up. the euro is mainly an asset for small countries, but its introduction also entails some risks, for example in the banking system. these deserve special attention. boris, i invite you to share with us the lessons and the fresh experience of croatia. 3 / 3 bis - central bankers'speeches