Croatia’s Entry into Eurozone Brings Changes to Banking Regulations

Zagreb, Croatia - January 1, 2023

The recent entry of Croatia into the European Union’s (EU) single currency zone, known as the euro area, has brought significant changes to the country’s banking regulations. As a result of this development, the capital structure and voting rights within the European Central Bank (ECB) have undergone modifications.

Changes in Capital Structure

Prior to Croatia’s adoption of the euro on January 1, its National Bank (Hrvatska Narodna Banka or HNB) had paid up only €2.7 million of its subscribed capital as a contribution to the ECB’s operational costs. Following its entry into the euro area, HNB was required to pay the remaining 96.25% of its subscribed capital, amounting to €68.7 million.

Voting Rights within the ECB

In terms of voting rights within the ECB’s Governing Council, Croatia’s entry has also brought changes. As a full member of the Governing Council, Governor Boris Vujčić now has a seat alongside the six Executive Board members and 20 governors from other euro area countries.

Rotation of Voting Rights

However, not all governors have voting rights at every meeting. To ensure efficient decision-making processes, the Statute of the European System of Central Banks and the European Central Bank limits the number of voting Governing Council members to 21 once the number of represented NCB governors exceeds 18.

• The remaining 15 votes are shared among the 20 governors on a rotating basis.
• This system ensures that decisions are reached in a timely manner by a simple majority, with consensus often being reached on most issues.

Conclusion

In summary, while attention is focused on the effects of Croatia’s entry into the euro area on the individual country, changes to banking regulations and voting rights within the ECB have also taken place. As the Eurosystem continues to grow, so too does the ECB evolve to accommodate new members.