The European Parliament supported Croatia's accession to the euro area by a vast majority of votes on Tuesday.

With 539 votes in favour from 632 MEPs in attendance, the European Parliament adopted the report on the introduction of the euro as legal tender in Croatia as of 1 January 2023, saying that Croatia met all the criteria for accession to the euro area.

Forty-eight MEPs abstained form the vote and 45 voted against, mostly those from right-wing political groups who criticised Croatia’s euro-area membership bid during discussion at a plenary session of Parliament on Monday.

Before an EU member state joins the euro area, the European Parliament gives its opinion on the recommendation from the European Commission. The last step is the adoption of the proposal at a meeting of the Economic and Financial Affairs Council on 12 July. The European Council has already endorsed Croatia’s euro area entry.

By adopting the euro, Croatia will join the Eurosystem, which comprises the European Central Bank and the central banks of the euro-area member states. The Croatian National Bank governor will sit on the Governing Council of the European Central Bank.

The Croatian finance minister will participate in Eurogroup meetings and the prime minister will attend euro-area summits. Croatia will also automatically become a member of the banking union, a bank supervision and resolution system.

The report by European Parliament rapporteur Siegfried Muresan of the European People’s Party (EPP), which was adopted on Tuesday, says that “Croatia fulfils all the criteria for adopting the euro as a result of ambitious, determined, credible and sustainable efforts by the Croatian government and the Croatian people.”

The report notes that Croatia’s accession to the euro area is the first significant EU integration process after Brexit and that it should enhance the positive image of the European Union in the Western Balkans region.

“Notwithstanding the difficult socio-economic situation generated by the health crisis and the most recent increase in energy prices, Croatia’s adoption of the euro and the fulfilment of the necessary criteria represent a strong political signal of the viability and attractiveness of the single currency of the Union,” the report says.

Adoption of the euro will strengthen Croatia’s economy and benefit its people and companies, as it will make the country’s economy more resilient, attract more foreign investment, increase the confidence of international investors and cut down currency exchanges, that will have a relevant effect in the country’s vital tourism sector, the European Parliament predicts.

The Croatian government was called upon to ensure that the introduction of the euro does not lead to artificial price increases.

“Croatia joining the euro area represents a strong political signal of the viability and attractiveness of the single currency of the Union. Twenty years after the introduction of the first banknotes, the euro is a symbol of European strength and unity. Thanks to its great commitment in its efforts to meet the conditions for adopting the euro, Croatia is now ready to join the euro area on 1st January 2023, less than a decade after joining the EU. The euro area as a whole will then welcome its twentieth member,” the European Parliament said in an explanation of its favourable assessment of Croatia’s readiness to adopt the euro.