Bulgaria should keep its currency board system until adopting the euro, and join the EU’s Single Supervisory Mechanism (SSM) immediately after Bulgarian banks pass stress tests, a nominee for a new chief of the country's central bank said on Thursday.

"The central bank should be an active participant in Bulgaria's accession to the eurozone," Biser Manolov said during hearings at the parliament’s budget and finance commission.

Manolov has been nominated by the Reformist Bloc, the junior partner in the coalition government led by Prime Minister Boyko Borisov. He was one of the four nominees for the post of Governor of the Bulgarian National Bank (BNB) who presented their strategies for the future development of the central bank before the commission on Thursday.  

Eurozone membership will decrease reputational risk for Bulgaria’s banking system and will improve the coordination and quality of banking supervision as well as access to information and funding conditions, Manolov said.

Manolov is member of the management board of the Deposit Insurance Fund (DIF). He headed the DIF from 2003 to 2011.

The term of office of incumbent governor Ivan Iskrov will expire on 10 October. Iskrov submitted his resignation to parliament last month, saying that he will step down on 10 July.

As a member of the Single Supervisory Mechanism Bulgaria will have access to the European Stability Mechanism, Manolov said.

“If we were a member of the SSM or the eurozone, this would have hardly happened and such amount of public funds would have hardly been spent,” Manolov said, referring to last year's collapse of Corporate Commercial Bank, or KTB, and the subsequent repayment of state-guaranteed deposits in the closed bank by the DIF.

Membership of the SSM will give huge potential to Bulgaria, Manolov opined. 

“Membership is a form of insurance of our banking system against future crises," he said.

The Single Supervisory Mechanism (SSM) is a new system of banking supervision for Europe. It comprises the European Central Bank (ECB) and the national supervisory authorities of the participating countries. The ECB, in cooperation with the national supervisors, is responsible for the effective and consistent functioning of the SSM.