What does the euro mean for borrowers?
Many loans in Croatia are already euro loans, nothing will change here. Existing kuna loans are converted into euros at the official rate, and the borrowers must not suffer any disadvantages as a result.
And what about new lending?
Not much will change there either. In the case of fixed interest loans, the interest rate remains unchanged, and in the case of kuna loans with variable interest rates, the reference interest rate that best corresponds is chosen. The private customer business will largely be in euros, foreign currency loans in the private customer business have become rare. The comparatively stable interest rates associated with the euro are already positive for borrowers in Croatia.
For the banks, however, an important business area is lost.
The banks are doubly challenged. The introduction of the euro is a major challenge associated with high costs and a high level of manpower. The preparations to ensure that the IT systems and so on are converted in good time have therefore already begun at most banks more than a year ago.
In addition, they fall around the exchange rate fees.
Yes, but the euro will give access to different and higher quality banking products.
For example?
There will be more opportunities for fund investments and innovative investment products that were previously not available with the kuna. There are also many more options with the euro when it comes to hedging instruments, for example interest rate hedging. Croatia’s economy will generally benefit from the euro. This benefits all sectors, including banks.
Does the euro also help the Austrian branches in Croatia?
They see the euro consistently as positive. Even if the introduction causes costs for some, they still benefit in the long term from the reduction in transaction costs, the elimination of currency risk and thus also from expensive currency hedging and interest rate stability.
How will the trade balance in Croatia develop overall?
Almost 70 percent of Croatia’s goods exports go to the EU, more than half to euro countries. Conversely, almost 80 percent of Croatia’s goods imports come from the EU and more than half from the euro zone. Two thirds of service exports also go to the EU and around 55 percent to euro countries. The euro will have a positive effect on Croatia’s foreign trade.