Croatia seems set to enter ERM-II in July. Adoption of the euro can be expected in 2023-24 at the earliest, with the final timing depended on post-COVID-19 economic and fiscal adjustment. Hungary and Romania enjoy a high level of public support for euro adoption, but lack the preparation.

Slovakia and Slovenia are so far the only two CEE countries that have fully integrated into the EU in the sense that they have become members of the Eurozone. After the Baltics joined the Eurozone in 2011-15 and the UK decided to leave the EU, the weight and voice of non-euro countries has declined. We expect that, during this decade, at least one country, Croatia, will become a new member of the Euro Area. Croatia’s strong aspiration for euro adoption should be confirmed very soon by entering ERM-II, where it is likely to stay for at least two years before the final assessment of Maastricht criteria is conducted.

Aside from Denmark, which has been an ERM-II member for over 20 years, but with little aspiration for euro adoption, eight other countries have successfully participated in ERM-II and adopted the euro. The average time spent in ERM-II is four years and eight months, though the sample is split into two camps, one where the process has been pretty straightforward and lasted approx. three years, the other comprising the Baltic countries, where the process was longer and impacted by the global crisis trends. Aside from Greece and Slovakia, where central exchange rates were revalued once and twice, respectively, all other countries experienced very stable rate developments inside ERM-II.