Croatia, which joined the EU bloc in 2013, has this month taken the helm of the rotating Presidency of the Council of the European Union, marking the first time the member state is holding this office.
Its Presidency comes at a time of change for the EU, as a new institutional and legislative cycle begins and the Union faces challenges brought on by the process of Britain’s upcoming withdrawal. For the next six months, it will be dealing with issues including the EU’s long-term budget, the Multi-annual Financial Framework for 2021-2027, and Brexit.
Ursula von der Leyen’s European Commission is urging Croatia to look at four key areas: climate change; the importance of leadership safeguarding EU unity during Brexit negotiations; progress in the EU’s budget negotiations and developments in accession talks with North Macedonia and Albania.
On its part, Croatia itself has built its six-month presidency on four pillars: a Europe that develops; a Europe that connects; a Europe that protects and; an influential Europe. When it comes to finance, the first pillar is of particular relevance to the sector, with Croatia endeavouring to strengthen the Economic and Monetary Union and the international role of the euro, while further developing the EU’s Capital Markets Union (CMU).
Additionally, the Croatian Presidency will need to continue the CMU’s revival process, which was one of the main focal points addressed by the preceding Finnish Presidency. In connection with this, an EU working group, the Next CMU High-Level Expert Group, has called for a major boost to equity markets, an enlargement of local investment opportunities, a greater flow in financial liquidity, and the strengthening of the international funding currency role of the euro.
Enhancing the competitiveness of the European industry and SMEs, further deepening the single market, and bolstering the Union’s digitalisation agenda are other priority points under the development pillar. Helping SMEs is an important part on the agenda, since they constitute a way of ensuring access to finance while increasing EU competitiveness.
The third pillar, which is about protecting EU citizens, is also of direct relevance to financial services wherein bolstering cooperation among member states in combatting organised crime, and fighting money laundering and the financing of terrorism are prime concerns.
Another priority under this pillar is protecting the financial interests of the Union and its members, raising the bar in the fight against fraud. In this area, Croatia’s Presidency will also focus on the fight against hybrid threats and malicious cyber activities and on building professional and technological capacity in the area of cyber security.
In terms of Croatia’s own ambitions in the financial sphere, the member state will strive to continue working to become a euro zone member. A pressing challenge is the country’s over-reliance on bank finance and the low level of awareness about savings and investment in shares among its citizens.
When it comes to Brexit, the impact this will have on the UK shifting away from being the EU’s financial centre has to be taken into great account. As the UK is set to withdraw from the Union on 31 January, the Croatian presidency will clearly have to facilitate the transition and take stock of the inevitable changes brought about by Brexit.