The Bulgarian National Bank (BNB) has warned against proposals to amend the Law on Bank Deposits tabled by the socialist opposition.

In a statement to the media the BNB said Thursday the idea to secure additional money for the Bulgarian Deposit Insurance Fund to withstand a crisis is not in line with the principles of the currency board and also the rules of the European Union.

A similar idea to boost the fund's liquidity is supported by the Finance Ministry, which however points out changes would not affect the situation at Corporate Commercial Bank (KTB).

The BNB at the same time categorically rejects any prospect of pouring money into the BDIF, saying such kind of intervention is forbidden according to the European legislation.

If the state moves to support the BDIF, this will be a financial transaction and not part of expenditures and therefore will not affect the size of Bulgaria's deficit and its current account, the bank believes.

Bulgaria's currency board was introduced in 1997 to provide stability after a huge financial and economic crisis.

The central bank informs it sent letters to Parliament, the European Commission and the European Central Bank (ECB) to warn of the bill could not only be at odds with Bulgarian and EU rules, but also fail to regulate relations between "the BDIF, on the one hand, and banks, the BNB and other persons in case of temporary shortage in funds [on the other]."

"On the contrary, adopting the bill will prompt a negative reaction from European institutions on behalf of the European Commission and the European Central bank and [would pose] risks to the country's financial stability as well," the BNB maintains.

The issue of securing liquidity at the BDIF topped the agenda of MPs after the developments at KTB, which had been under special supervision for months with depositors failing to have access to their savings.

Officials had reported the BDIF did not have sufficient funding to restore all assets of up to BGN 196 000 that are guaranteed by the state under EU law.