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Replacing The Croatian Kuna With The Euro

General Information on Upcoming Proces of Sub-frontloading With Euro Cash

In accordance with the National Euro Changeover Plan (hereinafter: the National Plan), which was adopted by the Government of the Republic of Croatia on 23 December 2020, for the purpose of making timely preparation for the upcoming changeover from the national currency to the euro, we would like to provide you herein below with the information on the process of conversion, while placing emphasis on the activities that will take place between you as a client and Privredna banka Zagreb d. d. (hereinafter: the Bank), in order to ensure your smooth operation.
The planned date when the euro will become the official currency is 1 January 2023. The preparatory period will start approximately 6 months prior to the introduction of the euro, or to be precise, from the date when the Council of the European Union makes a decision that the euro can be introduced in Croatia and sets the official fixed conversion rate, and will last until the euro introduction date. 
The Bank will conduct the conversion of the national currency to the euro free of charge.

The Coordination Committee for Cash Changeover (hereinafter: the Coordination Committee), led by the Croatian National Bank (hereinafter: the CNB) is the body that prepares the Action Plan for cash changeover (hereinafter: the Action Plan). 
In order to adjust business operations to the new official currency, each business entity should determine its own needs as well as required adjustments regarding the currency changeover. 
The (sub-)frontloading of euro cash is necessary to enable business entities to give change to their customers exclusively in euros as from the date of the introduction of the euro, in accordance with legal provisions.
According to the Action Plan, we can distinguish between two processes: sub-frontloading and simplified sub-frontloading. 

Sub-frontloading refers to the delivery through which banks supply in advance, i.e. frontload, professional third parties with euro banknotes and coins during the frontloading period. Professional third parties are business entities, including cash in transit companies. A precondition for the start of sub-frontloading (of cash) to business entities in the amounts larger than EUR 10,000 is the conclusion of an adequate agreement between a business entity and the Bank. 

The process of simplified sub-frontloading, unlike sub-frontloading, can be applied to business entities /micro-enterprises that have less than ten employees and whose annual turnover and/or total annual balance sheet does not exceed the amount of two million euro. The nominal value of euro banknotes and coins which can be sub-frontloaded to a business entity in this process does not exceed the total amount of EUR 10,000. Upon receipt of the delivery of cash, a micro entity will have to sign a statement on simplified sub-frontloading, whose content should be prescribed by the CNB by 30 June 2022. 

One month prior to the official introduction of the euro, business entities will be able to obtain from the Bank the so-called starter kits of euro and cent coins, with national motifs on the obverse side.  No fee will be charged on these kits, and the value of the kit will be calculated at the fixed conversion rate. Business entities will be able to use these coins for making payments in the country and abroad only after the date of the introduction of the euro. 

Starter kits, together with sub-frontloading and simplified sub-frontloading, represent the third segment of (sub-)frontloading of business entities.   
The Coordination Committee will set the criteria for supplying business entities / micro-enterprises with starter kits (for instance, the number of kits per purchase by a business entity, and the method of payment). 

  • The planned date of the beginning of sub-frontloading of business entities is 1 October 2022.
  • The planned date of the beginning of supply of starter kits is 1 December 2022. 
  • The planned date of the beginning of simplified sub-frontloading of micro-enterprises is 27 December 2022.
  • The sub-frontloading phase will last until 31 December 2022. 

You will be able to use the sub-frontloaded euro banknotes and coins only from the date when the euro becomes the official currency i.e. legal tender in the Republic of Croatia.
More information on the introduction of the euro in the Republic of Croatia is available at https://euro.hnb.hr/. 

In view of the fact that, on 1 January 2023,  the period of dual circulation of both euro and kuna cash will enter into force, during which consumers and non-consumers will be able to make payments for goods and services in both currencies, but the change will have to be given in euros, we kindly ask you to take into account – when planning your needs for euro cash – at least 5 to 7 business days after 1 January 2023 to avoid excessive pressure on our cash centres, branch offices of banks and Fina, as well as on cash in transit companies, to ensure constant supply of business entities with the new currency. 
We advise you to pay attention to your storage capacities for storing cash because, in accordance with the announced provisions of the Euro Act, during the frontloading period, the frontloaded cash will have to be stored separately from all other kuna banknotes and coins, as well as euro banknotes and coins, other currencies or other assets, to avoid their entering into circulation prior to the date of the introduction of the euro.
We would also advise you to increase, wherever possible, capacity for making payments by credit cards and debit cards. The dual circulation period will not apply to these forms of payment, so that all transactions after 1 January 2023 will be executed in euro. This will significantly reduce the pressure on the cash supply in the period following the introduction of the euro.

We will notify you of further steps in the process of sub-frontloading and simplified sub-frontloading, as well as the supply of starter kits, in a timely manner.
 

 

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