The Balkan nation bids farewell to its kuna currency as it enters Europe’s passport-free Schengen zone.

Croatia has switched to the euro and entered Europe’s passport-free zone – two important milestones for the country after joining the European Union (EU) nearly a decade ago.

At midnight on Sunday, the Balkan nation bid farewell to its kuna currency and became the 20th member of the eurozone.

It is now the 27th nation in the Schengen zone, the world’s largest passport-free travel area, which enables more than 400 million people to move freely around its members.

“It is the season of new beginnings. And there is no place in Europe where this is more true than here in Croatia,” tweeted EU chief Ursula von der Leyen, as she arrived in Croatia to mark the occasion.

She met Croatian Prime Minister Andrej Plenkovic and Slovenian President Natasa Pirc Musar at a border crossing with EU member Slovenia.

Croatia, a former Yugoslav republic of 3.9 million people that fought a war of independence in the 1990s, joined the EU in 2013.

‘Spent years waiting’

As revellers around Croatia took to the streets to ring in the New Year, the country’s interior minister, Davor Bozinovic, was at the Bregana border crossing with Slovenia to wish the best of luck to the last travellers to have their passports checked there.

“We opened our doors to borderless Europe. This goes beyond eliminating border controls, it is the final affirmation of our European identity,” Bozinovic said.

Experts say the adoption of the euro will help shield Croatia’s economy at a time when inflation is soaring worldwide after Russia’s invasion of Ukraine sent food and fuel prices through the roof.

Stipica Mandic, a 72-year-old professional driver, said the freedom of movement without long waits at border crossings was his personal dream.

“I spent years of my life waiting at border checkpoints, so I came here tonight to witness this moment, the moment after which I will wait no more,” he said.

But feelings among Croatians are mixed. While they welcome the end of border controls, some fear the euro switch will lead to an increase in the cost of living as businesses round up prices when they convert them.

“It will be difficult. Prices that are already high will become even higher,” said Ivana Toncic, a teacher from Zagreb.

Tourist agency employee Marko Pavic said Croatia was joining “an elite club”.

“The euro was already a value measure – psychologically it’s nothing new – while entry into Schengen is fantastic news for tourism,” he told AFP news agency.

Economic hardships

Experts say the adoption of the euro will lower borrowing conditions amid economic hardship.

Croatia’s inflation rate reached 13.5 percent in November compared with 10 percent in the eurozone.

Analysts stress that eastern EU members with currencies outside of the eurozone, such as Poland and Hungary, have been even more vulnerable to surging inflation.

French President Emmanuel Macron on Sunday hailed Croatia’s switch to the euro, describing it as a “stable and solid” currency that had contributed to Europe’s resilience in facing the consequences of the war in Ukraine.

Earlier on Sunday, Croatian National Bank Governor Boris Vujcic symbolically withdrew euros from a cash machine in downtown Zagreb.

In recent days, customers have queued at banks and ATMs to withdraw cash, fearing payment problems during the immediate aftermath of the transition period.

Croatia’s entry into the Schengen borderless area is expected to provide a boost to the Adriatic nation’s key tourism industry, which accounts for 20 percent of its gross domestic product (GDP).

Croatia will continue to apply strict border checks on its eastern frontier with non-EU neighbours Bosnia and Herzegovina, Montenegro and Serbia.

SOURCE: AL JAZEERA