The European Central Bank announced that the two countries Bulgaria and Croatia entered into the revised Exchange Rate Mechanism, known as ERM II, after completing a series of preconditions to strengthen the economy and banking industry.
Sofia and Zagreb will now peg their national currencies to the euro while the ECB keeps a close eye on their economies for at least two years.
That means they could enter the euro club as soon as January 2023. Lithuania was the latest and 19th country to join in 2015, after 11 years in the waiting room.
Joining the common currency also puts Croatian and Bulgarian banks under ECB supervision, plus other elements of the region’s banking union, including oversight of their emergency preparations by the Single Resolution Board.
Once Croatia and Bulgaria adopt the euro, their central bank governors will join the ECB’s Governing Council and help set monetary policy for the currency area.
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