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Germany’s assumption of the Presidency of the EU began on the 10th of July 2020. Along with it came the long-awaited announcement that Bulgaria and Croatia entered the ERM2 exchange rate mechanism and the Banking Union, otherwise called the “waiting room”. This is a historic moment for the two Balkan countries that will lead to the adoption of the single European currency.

The European Central Bank announced that for the next three years, Bulgaria and Croatia are expected to prepare and adopt all the necessary legislation enabling the euro area to expand with the two new members for the first time since 2015, when Lithuania became its 19th member.

“This fact is of great importance for the future of Bulgaria”, said the Bulgarian National Bank Governor, Dimitar Radev, at a briefing on Bulgaria’s accession to ERM2. Finance Minister Vladislav Goranov stated that this was the logical political move for Bulgaria after its access into the EU and NATO.

The adoption of the euro as Bulgaria’s national currency is possible by 2023. The European Central Bank has set a reference rate for the conversion of the Bulgarian lev into the euro of 1.95583 lev for 1 euro.

The last two years have been critical for the two countries in covering the predetermined requirements. In Bulgaria, two of the Bulgarian banks were unable to cover the capital requirements with one bank finding capital from the financial group it belongs to, whilst the other received an investment to the size of 19% of the capital, amounting to BGN 140 million from the Bulgarian state.

A former Minister of Economy in Bulgaria, Mr Nikolay Vasielv, stated that the single fact that Bulgaria is in the waiting room already changes its international image and the way the country is accepted. Bulgaria was also ready to be part of the Eurozone since 2005 and covers many of the requirements that some of the actual members don`t. Bulgaria has had a currency board for 23 years and the invitation for the waiting room was expected and has even been a little late, Mr Vasilev said.

Prepared by
Albena Rasheva
Senior Legal Advisor
Tax and Legal Division | Eurofast | Bulgaria

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