I was born in the small Croatian town of Koprivnica in 1984, the same year the Olympic winter games were hosted in Sarajevo. Both events happened in Yugoslavia, a country that will soon collapse in the bloody wars. Besides creating seven independent republics, this collapse caused an interesting side-effect. During my lifetime, four currencies were official in Croatia: the Yugoslav dinar (until 1991), Croatian dinar (1991-1994), kuna (1994-2023), and euro (from 2023).
In this text, we will discuss the chronology of those changes, and the constant Croatian love for foreign currencies, especially Deutschmark. In that context, Croatian admission to the Eurozone is almost like a fulfilled destiny.
This mortal coil… Yugoslav dinar
Yugoslav dinar was pegged to the US dollar until 1971 and the so-called Nixon shock after which a foreign exchange market was established in Belgrade. It allowed the dinar to float, but this made it only weaker and weaker compared to the dollar. In its last decade, Yugoslavia also experienced more economic problems, including high inflation which reached a peak in 1988, when it was over 200%. As the country's debt grew, the government was forced to print more money in order to meet its obligations. This led to a cycle of borrowing and money printing that fueled inflation. Finally, the revaluation happened on 1 January 1990, at a ratio of 10 to 1. The worsening situation in Yugoslavia meant people trusted the German mark more, strengthening the relationship that started in the 60s with the first German tourists in Yugoslavia and Yugoslav gastarbeiters in Germany.
The illusion of Yugoslavian financial and economic stability died with Tito. The Yugoslav dinar was the laughing stock. It was so weak that the state had to impose laws that were protecting it as the only valid currency for payments. It didn’t help.
Here are three examples from the same page in Večernji list newspaper issue (May 17th, 1989, p. 35) to illustrate it. One reporter visited the car fair near Rijeka and wrote: "It's not the secret that the cars are sold for the foreign currency, but it's really rare to see the prices displayed in the foreign currency". It was forbidden by the law to trade possessions valued more than 50000 dinars in foreign currencies. So this was the Yugoslav way of bending the law. Yet some got caught with 51740 marks, 1990 dollars, etc., as the article says. But that was just a drop in the ocean.
Some Yugoslavs were buying cars from Germany with the help of their friends and relatives living there. The cars were never in Germany, the seller was just giving the buyers living in Germany the option to pay with foreign currency. They would pay a specific amount converted from dinars to marks, but on the day of the delivery the exchange rate was already changed as the result of the inflation, and the difference in the marks was returned to the buyer. As the article says, Yugo 45 Koral cost 38.5 million dinars (7145 marks) on April 25th. But on May 15th, the same amount of dinars was worth 6238 marks. If the buyer paid on April 25th but received the car on May 15th, he would also receive 907 marks return. Another way of bending the law, this time with the profit.
The Yugoslav dinar was also scorned abroad. In 1989, Hungarians weren’t accepting it from the Yugoslavians that often came there to repair cars. Only the German mark was accepted.
Like its dinar, Yugoslavia was also doomed. I don’t remember much about the Yugoslav dinar from my own experience except I tore one banknote that belonged to my sister. Maybe I was an accidental prophet?
Croatian dinar: same name, same problems
The Croatian dinar replaced the Yugoslav dinar in 1991, but it was plagued by the same problems. During its short existence, the dinar declined in value by a factor of about 70. The highest banknote was 1000 dinars at the start, but 2000, 5000, and 10000 dinar banknotes were printed in 1992. Next year, 50000 and 100000 dinar banknotes were introduced. I was a skinny kid during the Croatian dinar’s existence and the only things I cared about were toys and junk food. So I still remember that the small French fries portion in the shop next to my elementary school cost 10 dinars, and the big one cost 25 dinars. But dinar was so worthless soon, it was exchanged in the ratio 1000:1 when kuna arrived.
But to be fair, this was only a transitional currency, and discussions were held from the start about the creation of the “proper” currency. We will discuss that a bit later because there were more pressing issues in 1991. The new states, Slovenia and Croatia, were in the problems. They were still not internationally recognized, so their new currencies (tolar and dinar) were worthless outside the territories they controlled. Yet the conflicts were already ongoing and they needed weapons. To buy the weapons they needed solid currency and neither tolar nor dinars were that. Instead, the German mark was needed, and to obtain it various methods were used, including selling Yugoslav dinar on the black market. The next paragraph is from the summary of the book U ime države (In the name of the state) by Matej Šurc and Blaž Zgaga: Slovenian Ministry of Defense agents were more successful. They managed to exchange 135 million dinars into millions of Deutschmarks in cash, with the assistance of the Croatian banker Ibrahim Dedić. Based on this secret operation they obtained hard currency from the Croatian treasury, with the police investigation being blocked intentionally. In the process, several hundred million dinars from the Slovenian defense budget were exchanged on black markets throughout the territory of former Yugoslavia, with the help of Albanian mafia. After dinars were removed from circulation in Slovenia and Croatia, trucks loaded with unusable banknotes crossed the border with Bosnia and Herzegovina, where they were used to buy any hard currency that could be found.
As claimed in the same book, the purchase of foreign currency in Bosnia and Herzegovina with Yugoslav dinar banknotes from Croatia was approved by the Croatian government. Croatian buyers also came with truckloads of dinar banknotes and then used convertible banknotes (usually German mark) to buy weapons abroad.
As stories like those usually go, some of the participants in this enterprise were killed in the 90s (Ibrahim Dedić), some were processed as criminals, and some are national heroes.
Kuna: stable, loved, but untrusted
As already said, the Croatian dinar was a transitional currency. The idea was to replace it with kruna (the crown). Designs were created and the winner was proclaimed.
Yet it didn’t happen. Kruna was soon changed into kuna (the marten) and the new currency got introduced in 1994. Kuna kept the prominent Croatians on the front and architectural motifs on the back that were chosen for the kruna. It made sense to name it kuna because in the middle ages taxes were collected in highly valued marten skins. Banski denar (denarius banalis), a coin struck and used in Croatia in 13th and 14th centuries contained the depiction of a marten. But there was a small inconvenient detail. In 1941, when the Ustaše regime formed the Independent State of Croatia, they introduced a currency called kuna.
It’s interesting to read claims about kuna guaranteeing Croatia’s monetary independence. It was never the case. Not only was kuna tightly pegged to foreign currencies, but its design was also inspired by the beloved Deutschmark banknotes of the fourth series. Not only inspired but sometimes also changed per request by Deutsche Bundesbank. The initial color for 10 kunas was so similar to the German mark banknote, it was confusing tourists and the staff serving them, so Deutsche Bundesbank requested the Croatian national bank to change the color. And it was done. If it wasn’t, the Germans would probably change it themselves since kuna banknotes were printed, surprise, in Germany (Giesecke+Devrient in Munich).
Kuna was visually appealing, stable, and resistant to inflation. It was respected and even loved, but never trusted. Serious business was done in the German currency. Nothing changed when the euro arrived. If it was good for the Germans, it was good enough for us too. Euro quickly replaced mark in everyday pricing. Houses, mortgages, apartments, cars… Everything was valued in euros, especially since the troubles with the credits in Swiss franks. But still, we loved the mark so much that it stayed written in the law until now.
In the end, sometimes it looked like Croats don’t need their own currency as long as something better is out in the world. Funny coincidence, it’s almost diachronic because Croatian dukes and kings in the early middle ages didn’t even bother to mint their money. The cash flow was low, and Byzantine nomisma was good enough to cover all monetary needs a typical Adriatic sklavinia could have. Especially if you were lucky enough like Duklja’s ruler Stefan Vojislav to have a Byzantine ship carrying 7200 nomismata wrecked off your coast in 1042. Now that’s real non-refundable European funding.
The admission of Croatia to the Eurozone and Schengen Area finalized the splitting of the successor states of Yugoslavia almost along the same financial, administrative, and cultural lines on which they were when their territories joined the first Yugoslav state in 1918. It’s hard to tell when and if other ex-Yugoslav states will follow Croatia. After the double experience of Yugoslavia, the European integrations were the only logical way for Croatia, and I am personally proud to witness the events of January 1st, 2023. The circle is now maybe completed, but only the change is constant. The title of this text says one lifetime, four currencies. I plan to live long, so I am pretty sure the currency count will rise. What will come next? Will the euro eventually collapse and we go back to the national currencies? Or will it get replaced by digital currency? Bitcoin, Dogecoin, Deutschecoin? Water? Only time will tell.