The adoption of the euro inevitably brings a degree of unease and uncertainty, much like the introduction of the currency board in the 1990s. This is how Petar Ganev, senior economist at the Institute for Market Economics, described the public sentiment in an interview with Bulgarian National Radio following the final approval of Bulgaria’s eurozone entry.

Ganev pointed out that the concerns of ordinary citizens - especially those in economically weaker regions - are less about the euro itself and more about fundamental economic issues like employment, wages, and pension levels, which are not directly linked to the currency in circulation.

He stressed that inflation, often blamed on the euro, has occurred multiple times over the past two decades regardless of the country’s currency status. Citing 2022 as the most recent example, Ganev added that some of the highest inflation in the EU today is in Romania - a country that still uses its national currency. In his view, longstanding structural problems are frequently, and wrongly, attributed to the euro.

Adopting the common currency, he said, eliminates the possibility of devaluing a national currency - because you no longer have one. However, the euro does offer access to increased investment and improved economic prospects. It gives governments and businesses more opportunities, but does not automatically guarantee better outcomes, Ganev warned.

From January 1, Bulgarians will no longer need to think about exchange rates. Even a decade later, levs will be exchanged at the same fixed rate used during the transition. For those who have saved cash, Ganev recommended depositing the money into lev-denominated accounts before the year’s end - possibly with the help of relatives - to avoid the inconvenience of having to physically exchange currency at post offices in January.

There is also no urgency to convert lev accounts into euros, he noted. Banks should make it clear that existing accounts will transition automatically, and there is no need for customers to take action on that front.

On the question of the property market, Ganev stated that Bulgaria’s accession to the eurozone is likely to fuel more interest, including foreign investment. He expects continued high liquidity in the banking system, which will support the current growth in lending. According to him, the real estate market remains highly active, and the euro switch is expected to further increase demand.

Source: BNR interview