Bulgaria on the way to the euro. The European Central Bank gave a positive assessment of the new BNB Law.
The financial institution states that the Bulgarian legislation has harmonized its norms with those of the Eurozone.
However, Frankfurt is making recommendations for technical changes to bring greater clarity to legal synchronisation.
The state is preparing a completely new Law on the BNB to replace the current one, which was adopted in the summer of 1997 with the introduction of the currency board in our country.
The new law will enter into force from the date of our country’s accession to the Eurozone.
One of the changes after the adoption of the euro will be a reduction of the mandatory minimum reserves for bank deposits: They are now 12% and will be reduced to 1%.
Slovakia and the Baltic countries joined after the 2008 financial crisis. These countries are similar to the Bulgarian economy. They are not experiencing a credit boom. Among the reasons are that in these countries the obligations to other countries are decreasing.
“For the last 5 years, the average between Bulgarian government securities and German ones is 0.6%, that is, we do not expect a shock reduction in interest rates after Bulgaria’s accession to the Eurozone, from there these risks related to creating conditions for a credit boom seem limited,” said Plamen Nenov, Council for Economic Analysis.
In addition, the BNB will be able to continue to apply the anticyclical capital buffer – a mechanism for limiting credit risk.
A temporary increase in inflation can be observed in restaurants or in small goods that we consume frequently such as coffee or chewing gum.
“Inflation in Bulgaria is higher than expected, but it is also true that when Croatia joined the Eurozone there was also a flexible understanding of the inflation criterion to allow them to join the Eurozone. My argument is that “Bulgarian inflation is high because of high food prices. And they are more important for the consumer basket in Bulgaria because the country is relatively poor,” said Guntram Wolf, Council for Economic Analysis.
European institutions will probably apply flexibility in relation to inflation in Bulgaria, experts expect.
They point out that the country’s macroeconomic management is good, and the debt-to-GDP ratio is the lowest in the European Union.
The euro will have a positive effect on wages, especially in sectors such as agriculture and services, which experience chronic labor shortages.