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Europe's hottest club is also one of its most exclusive. And, for the first time since 2015, it's about to admit a new member nation.
On Tuesday, European Union finance ministers formally voted to approve Croatia's entrance into the euro zone. The nation will become the currency's 20th member at the start of next year.
In about 30 years, Croatia has gone from a war-torn nation to a tourism hotspot after gaining European Union membership in 2013 following a series of governance reforms. But one headache remained for backpacking travelers: exchanging euros (used in 19 of 27 EU nations) for the Croatian kuna.
But, after what EU Economy Commissioner Paulo Gentiloni hailed as an "amazing journey," that headache is finally over. It took a few major steps, and comes with some great benefits:
- First, Croatia had to set an exchange rate of one euro to around 7.53 kuno, as well as meet certain criteria like maintaining sound public finances and moderating long-term interest rates in-line with EU benchmarks.
- The transition will officially occur on January 1 of next year, giving the country months to prepare before gaining access to the stability and perks of a well-integrated economy with the rest of the currency's user countries.
"Adopting the euro is not a race, but a responsible political decision," said Zbynek Stanjura, finance minister of the Czech Republic, which also currently holds the six-month rotating title of European Union presidency. Lithuania and Latvia were the last two nations to join the club, in 2015 and 2014 respectively.
Dollar Dip: Croatia's admission comes at a strange time for the euro zone. On Tuesday, the euro and the US dollar reached parity for the first time in two decades. The value of the euro has fallen 12% since the start of the year, as the war in Ukraine sends the continent into an energy and inflation crisis -- with many analysts saying a so-called hard landing is all but inevitable for the alliance's economy. American travelers may reap some temporary rewards, but it could spell trouble for global economic stability.