Croatia's Reforms for Euro Bid Backed by Region's Finance Chiefs

(Bloomberg) -- Croatia’s planned reforms for the banking sector were endorsed by euro-area finance chiefs as well as the European Central Bank, as the country advances on its path to join the common currency.

Officials welcomed a commitment by Croatia to support the ECB in conducting a health check of its banking system, according to a statement issued after a ministers’ meeting in Brussels on Monday. The supervisor’s so-called “comprehensive assessment” of Croatian banks may last about a year, the statement said.

“This is an important milestone for Croatia and this is also another important vote of confidence in the euro,” Pierre Moscovici, the European commissioner for economic affairs, said after the meeting. Earlier this month, Croatia sent a letter of intent to join the euro area’s waiting room, known as ERM-2, and it’s projected to adopt the currency as early as 2023.

The timetable is in line with the one given last year to Bulgaria, another euro hopeful from eastern Europe. The countries are required to join the ECB’s system of banking supervision and the bloc’s bank-failure mechanism before they can adopt the currency.

Other pledges by Croatia relate to “the macro-prudential framework, the anti-money laundering framework, the collection, production and dissemination of statistics, public sector governance and reducing the financial and administrative burden,” according to the statement.

--With assistance from Lorenzo Totaro, Viktoria Dendrinou and Jeannette Neumann.

To contact the reporter on this story: Alexander Weber in Brussels at aweber45@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Nikos Chrysoloras

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