ACCESSION OF THE REPUBLIC OF CROATIA TO THE EUROPEAN ECONOMIC AND MONETARY UNION

European monetary integration is a long-term process which ended with the establishment of the European Economic and Monetary union in 2002. Entering in the last stage of integration and adopting the euro is significant step for the economies of member states. To participate in the EMU, member states need to fulfil certain criteria, known as the convergence criteria or Maastricht criteria, which essentially comprise the fulfilment of the price stability, financial stability and stability of exchange rates and interest rates. Considering nominal criteria, member states must accomplish real convergence which means they need to reduce development lagging after other EU members. This paper examines effects of euro adoption on entire European Union including Republic of Croatia. The effects of adopting the euro on Croatian economy are explored from microeconomic and macroeconomic aspect. Regarding the variety of positive, but also negative effects on Croatian economy which are analysed in this paper, it can be concluded that adopting the euro has a positive effect on Croatian economy, assuming the convergence criteria achievement and initiation of the structural reforms that will reduce development disparities between Croatian economy and economies of the rest EU member states