Photo by BTA on 15 May, 2024

Bulgaria Must Finalize Its European Integration by Joining Eurozone ‘the Soonest Possible’ Central Bank Governor Says

World News Agencies By BTA - Bulgarian News Agency • 15 May, 2024

Jerusalem, 15 May, 2024 (TPS) -- SOFIA (BTA)
Bulgaria must finalize the process of its European integration by joining the Eurozone the soonest possible, Bulgarian National Bank Governor Dimitar Radev said at the opening of a conference titled “Bulgaria in the Eurozone, When?”, taking place in Sofia. He argued that “a delay of Bulgaria’s full integration into the core of the EU, which is the Eurozone, will have a cost and it is increasing over time”.

He was adamant that the damage from the delay will be worth billions.

At present Bulgaria meets all nominal criteria for accession to the Eurozone except for inflation. The negative difference for the price stability criterion is decreasing, including in the last month, but is expected to remain above the requirements by the date of the upcoming review (which will be based on the data as of the end of May), the BNB Governor explained.

He said that, institutionally, BNB and the Bulgarian banking sector are to a certain extent part of the Eurozone by virtue of the established regime in 2020 of close cooperation between the BNB and the European Central Bank. “BNB is the only central bank operating in such a regime. This ensures legal and full participation in the process of forming and implementing decisions on the supervision and resolution of euro area banks, plus those in Bulgaria. The results of the banking sector over the last more than three years are a testimony to the success of this participation,” Radev said.

He also pointed out that the Bulgarian lev is one of two currencies, other than the euro, which are part of the European currency mechanism, and that is a key precondition for accession to the Eurozone.

The central bank governor went on to catalogue the steps that this country has already taken to the euro changeover: adoption of a new Bulgarian National Bank Act which has the support of the ECB and the EC, and which practically finalized the legal convergence; a euro changeover bill has been drafted and is ready to be submitted to Parliament; the logistical and technical preparation, which is largely within the competence of the BNB, has reached an advanced stage, and the payment, information, accounting and statistical systems are ready for work in the Eurozone after a “final fine-tuning”.

The process of preparing the minting of the Bulgarian euro coins has been completed after coordination with the Commission and each of the member states. “We are moving to a test minting of 8 million coins – 1 million for each denomination,” Radev said. “The blanks, both for the test series and for the regular production, have been agreed and their delivery has started. The necessary areas for currency exchange have been secured, including in Sofia, Plovdiv and Varna, as well as the necessary equipment for the process. By the end of this month, the decision for Burgas is expected to be finalized and by the end of the summer a newly built cash center in Pleven will be operational,” Radev said.

“The Mint is fully prepared in terms of equipment and expertise for the minting of the Bulgarian euro coins. It is yet to receive the necessary license for the minting of euro coins, which will be done after the forthcoming certification of the trial series, the BNB Governor informed. The joint venture of the Bulgarian Mint already has a license and prints euro banknotes for the needs of the euro area central banks. The BNB’s fleet of armored and security vehicles is being thoroughly renewed, and new transport schemes and security systems have been approved. Radev pointed out that the total amount of banknotes and coins in the exchange process alone amounts to about 12,300 tons.

Over the last year, there has been a lot of hard work to create the capacity to conduct an active monetary policy. The preparation of commercial banks is being closely monitored and is also progressing according to plan, the central bank governor said.

“BNB and the banking sector will be fully ready within this year for the introduction of the euro in the country,” the BNB governor said. He clarified, though, that this is not enough in purely technical and logistical terms. “There are a number of information and accounting systems that are under the control of the executive and municipalities that need to be adapted to work in the euro area. These have been identified but there is still considerable work to be done to make them fully ready. In addition, there are four sets of conditions within the competence of the executive that need to be met before euro area accession, including in relation to the non-bank financial sector, insolvency, state-owned enterprises and anti-money laundering measures. The BNB Governor appreciated the intention of the caretaker government to continue work on these issues.

Radev also said, “Bulgaria needs a clearly established and sustainable pro-European political construct. Bulgaria needs to achieve several goals. The first one is the restoration of political contacts on the issue at the highest level. The second is to return to the path of fiscal consolidation. The third is the adoption of the law on the introduction of the euro as soon as possible. The fourth is to speed up work on the remaining conditions and technical preparations, which are mostly the responsibility of the government, because the BNB and the banking sector will be ready before the end of this year. If this scenario materializes as soon as possible after the upcoming elections, our chances of joining the Eurozone in 2025 remain strong and fully realistic,” the BNB governor added.