Remarks by Commissioner Gentiloni at the press conference on the Convergence Report on Member States' preparedness to join the euro area

Today marks a historic milestone both for Croatia and for the European Union as a whole.

For Croatia, it is a reminder of how far this country - that in the 1990s was experiencing the horrors of war - has come over the past three decades. We welcomed Croatia into our Union in 2013, and today we have concluded that Croatia is ready to adopt our single currency on 1 January 2023.

For the European Union, it is a reminder that our most ambitious project, our economic and monetary union, not only survived the existential crisis of a decade ago but emerged from it stronger and more resilient.

The euro remains a rock of stability in turbulent times. Joining the euro is more than a formal aim for EU Member States. It's an attractive opportunity. Having celebrated the twentieth anniversary of euro notes and coins at the start of this year – when the first twelve countries made the switch – today the euro area can look forward to welcoming its twentieth member.

Croatia's achievement reflects the determined efforts by the authorities to meet the legal criteria for entry into the euro area.

It's an extra plus that Croatia has carried out policies to which it had committed in the context of taking part in the exchange rate mechanism ERM II.

These relate to anti-money laundering, the business environment, public sector governance and dealing with corporate insolvencies.

As a result, today the Croatian people can look forward to joining more than 340 million citizens already using the euro as their currency.

But before we get there, there are a few more steps that need to be completed.

Our convergence report and that of the European Central Bank, also published today, must be considered by the European Parliament and the Council.

It must also be endorsed by the European Council, with the formal decision on Croatia's accession to the euro area expected to be taken at the July ECOFIN.

The practical preparations for the changeover from the kuna are already well underway. I want to congratulate Croatia also on the excellent cooperation between the State institutions and stakeholders, who have been closely involved in these preparations.

We will continue to monitor progress over the coming months and stand ready to provide the Croatian authorities with technical assistance for the transition if needed.

The Council has already approved the designs for the Croatian sides of all eight euro coin denominations and we signed a Memorandum of Understanding with the Croatian authorities last September on the start of euro coin production, for which the Croatian Mint has acquired new equipment and facilities. The mass production of euro coins can start once the Council has taken its decision on Croatia's entry to the euro area.

Being a member of the euro area should bring several benefits for Croatia's economy. Investment and consumption could benefit from lower financing and transaction costs, as well as higher capital flows.

Croatia will also benefit from the removal of a large share of the remaining foreign-exchange risks from the banking system, the liquidity and financial support possibilities within the euro area as well as from the integration into the banking union, which is already a reality.

Euro area membership will mean improved price transparency, increased competition, and lower transaction costs for imports and exports, which represent a substantial part of Croatia's GDP.

We know that many citizens are concerned about price rises as a result of the changeover, especially in these times of high inflation. This is why it is essential that the Croatian authorities take active measures to reduce risks related to rounding, menu prices, and other forms of possible abuse.

Proper actions are needed for strong enforcement of competition rules, price monitoring, providing sufficient information to customers, and involvement of stakeholders in fair pricing campaigns. And we welcome the initiatives underway in this sense.

Of course, going forward Croatia will need to continue with reforms and investments to increase potential growth, while pursuing prudent fiscal policies and strengthening the institutional framework, to ensure that its economy prospers once in the euro area.

To this end, the effective implementation of the reforms and investments set out in Croatia's recovery and resilience plan will be key. Let me recall that Croatia is one of the biggest beneficiaries of the Facility in GDP terms, with €6.3 billion in grants. And we have recently provided a preliminary positive assessment to Croatia's first payment of €700 million, net of pre-financing, which we hope can be disbursed this month.

Today's report also covers the progress towards meeting the Maastricht criteria by Bulgaria, Czechia, Hungary, Poland, Romania and Sweden. All of these Member States are legally committed to adopting the euro at some stage (only Denmark has a legal opt-out and is thus not covered by this exercise).

While none of these Member States currently fulfils all of the criteria, Bulgaria aspires to enter the euro area as of 2024. We will continue working closely with Bulgaria – as we have with Croatia – to support its efforts so that it can join the euro area. This goal is within reach, provided all the criteria are met.

To conclude, our message today: congratulations to Croatia - Čestitke Hrvatskoj! - on this impressive achievement. And full support from the Commission for the next steps in this journey that we will take together.

And with that I will take a few questions. Thank you.