Croatia has submitted its application for membership of the European exchange rate mechanism (ERM-2), considered the antechamber of the euro, Eurogroup President Mário Centeno announced on Monday .
Zagreb hopes to join ERM-2 next with a view to becoming full members of the Eurozone in 2023 at the earliest.
The country has committed to preparing for the transition of its banking sector under the supervision of the ECB, to strengthen its arsenal against money laundering and to make its public administration more efficient and less costly, the EU said a statement.
The ECB and the European Commission will evaluate the implementation of these commitments over a one-year period, after which Croatia could join ERM-2.
It will remain there for at least two years before it can start concrete preparations to adopt the euro, which should take another year. Bulgaria started the same procedure last year for a changeover to the euro at the earliest in 2022.
Croatia joined the EU in 2013 and its economy is one of the weakest in the European bloc.
In April, the average wage was 6,434 kunas (870 euros) and the unemployment rate was 8.5 percent.
Croatian officials to point to the benefits of the introduction of the euro as around 80 percent of deposits in banks are in euros and the country’s main partners are in the euro area.
Surveys show, however, that the population is divided on the issue. According to opinion polls, between 39 and 52 percent of Croats support the introduction of the European currency.