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According to Dimitar Radev, the Bulgarian National Bank (BNB) performs a wide range of tasks related to the introduction of the euro
Dimitar Radev was born on July 12, 1956. He holds a master's degree in economics, finance and credit. In 1994, governor of the BNB, in a publication in the quarterly bulletin of the Association of Banks in Bulgaria, issue 73, January 2023.
The series of crisis trials in recent years demonstrates the high adaptability and resilience of the banking sector in Bulgaria.
This is also evident in the current unstable macroeconomic environment, dominated by external factors with a high degree of risk and uncertainty, against the background of an unstable domestic political framework.
The indicators of the banking sector for capital adequacy, liquidity and profitability continue to exceed the average in the European Union, explains Radev.
The beginning of the year is a time to focus on upcoming tasks and strategic challenges.
For the banking sector, they are largely related to the need to successfully finalize Bulgaria's accession to the Eurozone.
The main risk to the accession process in the given time horizon is the development of the political situation in the country.
The success of the process presupposes active policy consultations with our external counterparts and extensive legislative activity within the country within the next few months.
The ongoing political crisis calls into question both political and legislative action to support the accession process, says the Central Bank governor.
Regardless of the political crisis, the parliament adopted at the end of last year with a near-constitutional majority a decision obliging the government and the BNB to accelerate preparations for the country's accession to the eurozone with a target date of January 1, 2024. In addition, the BNB and the banking sector until to a large extent, they are already part of the eurozone after the country's accession to the European Banking Union on October 1, 2020. Therefore, the BNB and the banking sector must continue actively with the already started technical preparation.
In view of the strategic predetermination of the process, the results of this preparation will remain necessary, even with a possible slowdown in the pace of the process in the context of the political situation in the next few months, says Dimitar Radev
Dimitar Radev was born on July 12, 1956. He has a master's degree in economics, finance and credit. In 1994.
From the position of the BNB, the preparations for joining the Eurozone will not change the framework or the operational functioning of banking supervision.
This stems from the fact that Bulgaria has been a full member of the Single Supervisory Mechanism (SSM) for over two years after joining the European Banking Union and the establishment of close cooperation between the BNB and the European Central Bank.
An integral part of this process was the inclusion of the Bulgarian lev in the Currency Mechanism II in July 2020.
The BNB performs a wide range of other tasks related to the introduction of the euro, deriving from the competences and responsibilities of the central bank.
For this purpose, we have provided the necessary organization and resources.
The BNB's budget for 2023, adopted by the BNB's Governing Council last month, determines about BGN 110 million in costs for activities specifically in connection with the preparation for the euro and about BGN 53 million in the BNB's investment program related to this preparation.
The responsibilities of the BNB during the introduction of the euro cover wide areas.
Among the work commitments are the selection of the design of the Bulgarian euro coins, the withdrawal of the Bulgarian lev from circulation, the adaptation of the ATM software to work with euros, as well as the provision of euros to the banks, says Dimitar Radev
Dimitar Radev was born on July 12, 1956. He has a master's degree in economics, finance and credit. In 1994.
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Among these tasks, a task will be the selection of the national side of the future Bulgarian euro coins.
In view of the advanced stage of practical preparation, there are arguments (including following the example of other countries that joined the eurozone before us) that the Bulgarian euro coins should reproduce the design of our current exchange coins.
This will facilitate recognition and the transition to the new coins in Bulgaria and will ensure continuity in the history of Bulgarian monetary signs and confirmation of national identity through the familiar symbols of the Bulgarian lev - already on the scale of the entire eurozone and with the global spread of the euro, says the governor of the BNB .
The tasks of the BNB cover the coordination of the training of the persons under the supervision of the BNB, as well as the adaptation to work with the euro of the payment systems, the system for registration and settlement of government securities, and the accounting systems serving the work of the BNB.
Banks also play an important role in the infrastructural preparation and effective introduction of the euro.
They are already running an intensive schedule with numerous hands-on projects related to joining the Eurozone.
The coordination between the BNB and the banks is at a good level and informs the assessment of the overall progress in the process of preparation for the euro.
The tasks and responsibilities for banks are outlined in the National Plan for the introduction of the euro.
The plan describes the need to prepare for activities such as revaluation of deposits, loans, securities and other financial instruments, as well as equity participations.
Before the date of introduction of the euro, banks must prepare their information systems for double presentation in BGN and EUR of basic bank documents and transactions (account balances, bank transfers, ATM withdrawals, fee and commission rates, principal and interest payments, interest on deposit accounts).
On the day of the introduction of the euro, the bank accounts will be automatically converted from BGN to EUR.
All funds in BGN on current, deposit, savings and other accounts in banks and other payment service providers will be converted into euros free of charge.
As a result of the automatic conversion from BGN to EUR, there will be changes in the nominal value of collateral pledged or mortgaged in favor of the banks.
Banks will also have important responsibilities in the exchange of banknotes and coins, in the months before and after the introduction of the euro.
For example, two weeks before the date of the introduction of the euro, the BNB will start pre-supplying the banks with euro banknotes and euro coins with a Bulgarian national side.
In the same period, the banks will start supplying merchants and "Bulgarian Post" EAD with euro banknotes and euro coins with the Bulgarian national side (no fee) - the so-called
secondary pre-supply.
After the introduction of the euro, during the first 6 months the banks (together with "Bulgarian Post" EAD) will necessarily provide free exchange of banknotes and coins from leva to euro.
After the expiration of the first 6 months to 1 year after the introduction of the euro, banks will be obliged to continue exchanging banknotes and coins from leva to euro, and will now be able to apply a fee for this service.
After 1 year from the introduction of the euro, the service for exchanging banknotes and coins from leva to euro, again with the possibility of applying a fee for this service, will be provided by the banks at their discretion.
The BNB will continue to exchange banknotes and coins from leva to euros free of charge and indefinitely.
Of key importance for a successful and timely accession are further important legislative changes related to the legal integration of the BNB into the Eurosystem and the need to adopt a Law on the introduction of the euro in Bulgaria, regulating the framework principles, rules and procedures for the introduction of the euro as an official currency in our country, says the governor of the Bulgarian National Bank.
Dimitar Radev
introduction of the euro
entry into the Eurozone
BNB