Croatia has switched to the euro and entered Europe’s passport-free zone – two major milestones for the country after joining the European Union (EU) nearly a decade ago.

At midnight on Sunday, the Balkan country said goodbye to its kuna currency and became the 20th member of the eurozone.

It is now the 27th country in the Schengen Zone, the world’s largest passport-free travel area, allowing more than 400 million people to move freely around its members.

“It is the season of new beginnings. And there is no place in Europe where this is truer than here in Croatia,” tweeted EU chief Ursula von der Leyen, when she arrived in Croatia to mark the occasion.

She met Croatian Prime Minister Andrej Plenkovic and Slovenian President Natasa Pirc Musar at a border crossing with EU member Slovenia.

Croatia, a former Yugoslav republic of 3.9 million people that fought a war of independence in the 1990s, joined the EU in 2013.

‘Waited for years’

As revelers in Croatia took to the streets to ring in the new year, Interior Minister Davor Bozinovic stood at the Bregana border crossing with Slovenia to wish the last travelers there to have their passports checked good luck.

“We have opened our doors to the borderless Europe. This goes beyond abolishing border controls, it is the final affirmation of our European identity,” said Bozinovic.

Experts say the introduction of the euro will help protect the Croatian economy at a time when global inflation is skyrocketing after the Russian invasion of Ukraine sent food and fuel prices through the roof.

Stipica Mandic, a 72-year-old professional driver, said freedom of movement without long waiting times at border crossings was his personal dream.

“I’ve spent years of my life waiting at border controls, so I came here tonight to witness this moment, the moment when I won’t wait anymore,” he said.

But feelings among Croats are mixed. While they welcome the end of border controls, some fear that the changeover to the euro will lead to a rise in the cost of living as companies round up prices when they convert them.

“It will be difficult. Prices that are already high will become even higher,” says Ivana Toncic, a teacher from Zagreb.

Marko Pavic, a tourist office worker, said Croatia was joining “an elite club”.

“The euro was already a measure of value – psychologically it is nothing new – while joining Schengen is fantastic news for tourism,” he told AFP news agency.

Economic difficulties

Experts say the introduction of the euro will lower lending conditions amid economic hardship.

Inflation in Croatia reached 13.5 percent in November, compared to 10 percent in the eurozone.

Analysts emphasize that eastern EU member states with currencies outside the eurozone, such as Poland and Hungary, have been even more vulnerable to rising inflation.

French President Emmanuel Macron on Sunday hailed Croatia’s move to the euro, describing it as a “stable and solid” currency that had contributed to Europe’s resilience to the effects of the war in Ukraine.

Earlier on Sunday, Boris Vujcic, the governor of the National Bank of Croatia, symbolically withdrew euros from an ATM in the center of Zagreb.

In recent days, customers have been queuing at banks and ATMs to withdraw cash, fearing payment problems in the immediate aftermath of the transition period.

Croatia’s entry into the Borderless Schengen Area is expected to boost the Adriatic country’s main tourism industry, which accounts for 20 percent of its gross domestic product (GDP).

Croatia will continue to apply strict border controls on its eastern border with non-EU neighbors Bosnia and Herzegovina, Montenegro and Serbia.

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