Ivan Iskrov expresses opposition to the idea of Bulgaria joining the proposed EU banking union; discusses protecting domestic economic interests

By Catherine Snowdon

Central Banking

Ivan Iskrov, the governor of the Bulgarian National Bank, on September 17 said he opposed the country's involvement in a European banking union.

In a speech at the official opening of the new academic year at the University of National and World Economy in Sofia, Iskrov voiced his concerns over losing sight of Bulgarian interests during international negotiations.

"Is it really true that foreign authorities in all cases have more knowledge, more successful experience or better intentions when it comes to the fate of Bulgaria and the Bulgarian people, and the Bulgarian economy in particular?" the governor asked. "On the contrary, we should always look for the Bulgarian perspective and try to draw lessons from our own experience and stand up for the national interests. We must be constructive but not na?ve in our relations with the rest of the world," he said.

Iskrov said he could give "tens" of examples of ideas and proposals from external parties that did not consider the economic and financial interests of the country.

One of these was, he said, the recently launched idea of the banking union in the EU. The governor offered central bank support for the notion of increased integration and governance within the eurozone, including a fiscal union, banking union and political union, but said Bulgaria was not ready to be a part of the wider European co-operation.

"We are against Bulgaria's accession to the euro area's banking union at this stage," the governor said, making it clear that his gripe was with the transfer of too much power over the country's economy.

"It is clear from the proposals made by the European Commission a few days ago that any accession by Bulgaria to the thus contemplated banking union will mainly boil down to an unilateral transfer of considerable national sovereignty to Frankfurt and Brussels, against which the country will receive nothing back," Iskrov said.

The governor pointed out one specific hole in the plans. "Unified supervision goes hand in hand with establishing a common deposit guarantee scheme and a common bank restructuring framework. An element that is presently missing in the proposal, and we still do not know what that will look like."

Steve Hanke, a US economics professor who was the architect of Bulgaria's currency regime agrees with the caution displayed by Iskrov. "I enthusiastically support his message, the governor makes the important point that no one knows exactly what the union entails at this point. Who signs a contract without knowing what's in it?"

The governor went on to criticize Bulgarian nationals who had left the country to work for international organizations. "I will share with you that unfortunately we often face the disappointment to work with our compatriots abroad who have forgotten their Bulgarian origins. Some of them wouldn't even think twice to do harm to Bulgaria if that would benefit their own selfish interest, or if in that way they would earn the approval of their superiors," Iskrov said.

On September 12, the European Commission released plans to introduce a single supervisory mechanism for banks in the eurozone as part of a wider banking union. Approval from all 27 EU member states is needed for the proposal to proceed in its entirety.

We need your support so Novinite.com can keep delivering news and information about Bulgaria! Thank you!