Bulgaria received a green light from the Finance Ministers of the Eurogroup to enter the Eurozone’s waiting room (The ERM2 mechanism) and the Banking Union in one year. The decision is a result of Sofia’s bid to adopt the single European currency, which in fact is the obligation of each EU member state. However, most EU members which have not yet joined the Eurozone do not hurry undertaking the necessary actions and prefer to keep their national currency. But why Bulgaria is so determined to enter the Eurozone and other countries do not show such a big enthusiasm to adopt the Euro? All public opinion surveys in Bulgaria show that the majority of the Bulgarian citizens support the transition from Lev to Euro, because they believe that Bulgaria will move closer to the core of the European Union consisting of highly developed and rich countries. However, some people and circles in Bulgaria are against this country’s accession to the Eurozone. A petition against the adoption of the Euro has been launched in Bulgaria. According to its organizers, over 100,000 Bulgarians already signed the petition, insisting that Bulgaria maintains its fiscal and financial independence.

However, most politicians, economic analysts and experts unanimously support this country’s accession to the Eurozone. Thus, the Bulgarian cabinet receives strong support in its efforts to make this country a member of the Eurozone. Bulgaria applied for membership in the Eurozone and the Banking Union shortly after the end of its first rotating Presidency of the Council of the European Union. According to the majority of international observers, experts and high-standing officials from the European Commission, Bulgaria’s EU Presidency was very successful and boosted the image of this country in the European Union. That is why the Eurogroup gave a green light on Bulgaria’s bid to join the bloc’s banking union, which is a step towards this country’s adoption of the Euro.

However, we must admit that this is only the beginning of a very long process and Bulgaria may adopt the single European currency as early as in 2022. Bulgaria now has twelve months to prepare to enter the ERM-2 (The Eurozone’s waiting room). When this country makes all legal and institutional reforms demanded by the Eurogroup it will be allowed to enter the Eurozone’s waiting room. Bulgaria will stay in the ERM-2 mechanism for at least two years before it actually joins the Eurozone. Sofia is convinced that it will not face problems fulfilling the requirements of the EU and the European Central Bank.

Twenty years ago Bulgaria introduced a Currency Board. This is a monetary authority which is required to maintain a fixed exchange rate with a foreign currency. The Bulgarian Lev was pegged to the Euro at an exchange rate of 1.95583 BGN per Euro. In other words, the exchange rate between the Bulgarian national currency and the single European currency will remain fixed until this country’s accession to the Eurozone, which rules out possible appreciations of depreciations of the Bulgarian Lev. Moreover, all politicians and economists are supporting this country’s accession to the Eurozone. In fact, Bulgaria has already introduced the Euro without being officially a member of the Eurozone. In this sense, the transition from Lev to Euro is expected to be much easier and painless as compared to such transition in other EU member states. No financial turbulence and negative consequences are expected to occur in Bulgaria after the adoption of the Euro. On the contrary, the well-functioning Bulgarian economy and this country’s public finances are expected to receive additional stimulus when Bulgaria becomes part of the monetary union.

English version: Kostadin Atanasov