Fiscal Responsibility and Public Accountability: Keys to Bulgaria’s Success in the Eurozone
Lyudmila Elkova underscored that joining the eurozone goes beyond mere procedural steps
Bulgaria, which is seeking to cement its path to euro adoption this year, said it has no plans to join Europe’s banking union before switching to the common currency.
The Balkan nation wants to join the exchange-rate mechanism -- the waiting room for euro adoption -- this summer. While becoming a member of the union before entering the euro area could help allay concerns over banking transparency in the wake of money-laundering scandals elsewhere in eastern Europe, such a step isn’t on the cards.
Efforts to place its banks under ECB supervision have stalled since 2014, when the government initially sought to join the Single Supervisory Mechanism amid the worst banking crisis in 17 years.
Stress tests two years later showed the financial system to be stable. Even so, there were “pockets of weaknesses,’’ according to the European Commission, as two domestically owned banks of the country’s 22 lenders needed to replenish their capital, including First Investment Bank, the third-biggest.
“The events in Bulgaria and lately in Latvia, after the banking crisis there, show that as an economy and as a country Bulgaria will benefit from the banking union,” Lyubomir Mitov, a UniCredit SpA consultant based in Washington D.C., said Wednesday by phone. “Control over lenders’ supervision and their regulation will be partly moved out of the country and monitored externally.”
The European Union’s poorest state by per-capita output ticks all the economic boxes for ERM-2 entry. Its national currency, the lev, is already pegged to the euro, public debt is well below the euro-area average and the EU cap, and the nation runs a budget surplus. Approval has become a matter of political will from the bloc’s authorities.
It’s possible to join the banking union, set up as a response to the euro-zone crisis, without being a member of the currency bloc, according to Raffaella Tenconi, chief economist at ADA Economics Ltd in London. Such a move would hand the power for supervision of systemically important lenders and their possible wind-up in the event of crises to the ECB. It would also greatly reduce government influence in the sector.
ECB supervision would “provide additional guarantees” that bank crises like Corporate Commercial Bank AD’s 2014 collapse won’t happen again, according to Daniel Gros, director of the Center for the European Policy Studies in Brussels. Local regulators didn’t spot the problems early enough, though the central bank has since improved its operations “considerably,” he said.
Source: BLOOMBERG
Lyudmila Elkova underscored that joining the eurozone goes beyond mere procedural steps
As Bulgaria stands on the verge of adopting the euro, the country faces a sharp rise in counterfeit banknotes
At a briefing, Finance Minister Temenuzhka Petkova expressed optimism that Bulgaria is on track to meet the eurozone’s price stability criterion once again in June
Some Bulgarians are beginning to exchange their leva for euros ahead of the country’s eurozone entry, only to find that the rates offered at banks and exchange offices differ from those announced publicly
Bulgaria’s annual inflation rate climbed to 4.4% in June 2025, marking its highest point since December 2023
Deputy Finance Minister Metodi Metodiev described the recent upgrades to Bulgaria’s credit rating by three international agencies as a clear sign of growing investor confidence
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