Talking Kuna in Croatia

Earlier this month we visited Croatia ahead of its upcoming presidency of the Council of the EU in the first half of 2020. This is the country’s first term in the presidency since joining the EU in 2013.

While there, we met with senior officials from a number of Croatian ministries, parliamentarians and senior regulators to discuss areas of shared interest and cooperation.

We learned that while the Croatian financial services sector has limited exposure to the UK, its regulators are in close contact with those firms in the country who expected to be impacted by Brexit. Croatia is yet to implement any national legislation to supplement actions taken by the European Commission ahead of Brexit, but officials seemed confident that the country’s financial institutions were well-placed to deal with a no-deal Brexit.

Looking beyond Brexit, Croatia has recently started the formal process of joining the Euro and, if all goes according to schedule, it will join in 2023. The industry reaction has been mixed, with pension funds and banks in favour of the move, fund managers less so, and the insurance industry agnostic. The public is equally divided on the issue, with many viewing the Kuna – Croatia’s currency – as a symbol of national pride.

To round off the trip, the British Ambassador kindly hosted a working dinner with senior Croatian policymakers and financial and related professional services practitioners. Discussions covered a broad range of EU-wide issues and challenges, including how the Capital Markets Union could be progressed.