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The Ministry of Finance has released a draft law for public discussion concerning the adoption of the euro in Bulgaria. The primary aim of the proposal is to ensure a smooth and transparent transition to the European currency.
The deadline for receiving feedback on the draft law is April 24, 2024. The proposed legislation outlines the existing plan for replacing the Bulgarian lev with the euro. The decision to enshrine this plan in law, rather than a regulatory decree, aims to provide legal certainty to society and ensure the efficient functioning of the economy during the transition period.
One significant benefit highlighted in the draft law is the potential savings for businesses and households. Currently, the costs associated with currency conversion between the lev and the euro amount to approximately BGN 300 million annually. These costs have escalated to BGN 500 million per year due to inflation. However, once Bulgaria adopts the euro as its official currency, businesses and individuals will be able to conduct transactions in euros without incurring additional exchange fees. This shift is expected to alleviate the financial burden on businesses and households.
Furthermore, the transition to the euro is described as a one-time event, with limited costs associated with its introduction. It is anticipated that there will be no subsequent impact once the transition is complete.
Conversion and Rounding Rules
The draft law outlines the procedures for converting and rounding monetary amounts from Bulgarian lev (BGN) to the euro (EUR) as part of the transition process. It emphasizes the importance of accurate conversion and rounding to ensure the legitimacy and smooth implementation of the euro adoption.
The regulatory act establishes a mechanism for automatic conversion of BGN amounts to EUR and sets forth essential rules for the conversion and rounding processes. Incorrect conversion and rounding could undermine the integrity of the euro introduction process. Concerns are raised about the potential for price increases due to improper currency conversion, which is a common worry among citizens.
The draft law specifies the official exchange rate for converting leva to euro, as determined by Council Regulation (EC) No. 2866/98. This exchange rate has remained unchanged for twenty-five years, providing stability and continuity in monetary transactions.
A notable feature is the proposal of two rounding rules. The "general rule" dictates rounding the converted values to the second decimal place based on the third decimal place, following standard mathematical rounding principles. This rule applies to various transactions, including goods and services, financial instruments, and government securities.
Additionally, a special rule applies to remuneration for work, benefits, cash, social benefits, and pensions. In these cases, values are rounded in favor of the recipient, with the second decimal place increased by one unit if the third decimal place is greater than zero. This ensures fairness in monetary transactions and aligns with the interests of recipients.
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