Croatia launches euro bid

Zagreb seeks to begin two-year preparation and put its banks under ECB oversight in 2020.

Croatia has officially applied to join the euro.

Zagreb’s finance ministry and central bank sent a letter of application — obtained by POLITICO — on Thursday to the European Commission’s euro chief, Valdis Dombrovskis, and Mario Draghi, European Central Bank president.

Croatia said it expects to enter a two-year scrutiny period called the EU’s Exchange Rate Mechanism, or ERM II, by the summer of next year.

ERM II will put the ECB in charge of the country’s monetary and exchange-rate policy, with the aim of keeping Croatia’s kuna at a consistent value in euro terms. Frankfurt and Brussels also will help the government prepare for adoption of the common currency.

Croatia’s letter highlighted six other pledges to complete by the summer of 2020 as part of its eurozone bid.

The country will join the banking union — putting its lenders under ECB supervision — and boost anti-money laundering safeguards, while bolstering protections for borrowers.

Others milestone include improving the “collection, production and dissemination of statistics,” strengthening governance within the public sector and reducing administrative burdens for companies.

Finance ministers from the 19 euro countries are due to discuss Croatia’s application when they meet in Brussels on Monday for this month’s Eurogroup.

The ministers will also discuss Bulgaria’s bid, which Sofia put forward last year.