BNB Governor Radev Explains Bulgaria’s Euro Space Accession

Dimitar Radev, governor of the Bulgarian Nationwide Financial institution, sees new alternatives forward, together with continued fiscal prudence.

International Finance: Bulgaria is about to affix the euro in January, a big achievement for the nation and the Bulgarian Nationwide Financial institution (BNB). What would be the largest modifications for the economic system and for the common citizen?

Dimitar Radev: Euro space accession is certainly a strategic milestone for Bulgaria. It crowns years of constant effort—macroeconomic convergence, institutional improvement, and accountable policymaking. For the economic system, it means deeper monetary integration, enhanced investor confidence, and higher resilience to exterior shocks. For the common citizen, probably the most quick results will probably be sensible: elimination of alternate price danger with our important buying and selling companions, decrease transaction prices and extra clear pricing. Briefly, membership opens new alternatives for sustainable development and prosperity. Nevertheless, I have to emphasize that these advantages will totally materialize provided that we proceed the disciplined insurance policies which have introduced us so far.

GF: Do you will have any considerations about membership?

Radev: There are at all times dangers, however they don’t stem from the euro itself—they come up from how we handle our tasks inside the euro space. The actual danger lies in home complacency: the mistaken perception that euro membership can substitute for sound nationwide insurance policies. It can not. Quite the opposite, participation within the euro space will increase the necessity for fiscal self-discipline, structural reforms, and powerful establishments.

GF: You could have acknowledged that Bulgaria won’t observe Greece’s instance and use decrease rates of interest to go on a spending spree. How can this be prevented if firms and people need to achieve this?

Radev: Bulgaria has a powerful custom of fiscal prudence, and our low debt-to-GDP ratio—among the many lowest within the EU—is proof of that. Lately, this self-discipline has been examined by political instability and world volatility, resulting in some loosening of the fiscal stance that should now be addressed. It is very important word that stress for greater spending hardly ever comes from households or companies—it originates from political selections. The temptation to make use of decrease rates of interest as a rationale for expansive fiscal coverage is well-known. That’s the reason Bulgaria’s established institutional framework, anchored in fiscal guidelines and prudent oversight, is important. I’m assured that fiscal self-discipline will stay our guideline.

GF: Membership within the euro means the BNB loses one among its major financial weapons, financial institution reserve ratio necessities, that are at present set at 12% with no curiosity paid on these reserves. Is there another you should use?

Radev: Sure, the institutional context will change. Reserve necessities will probably be harmonized with eurosystem guidelines, and the BNB will now not decide them unilaterally. However it’s vital to recall that, beneath our foreign money board association—other than reserve necessities—our capacity to conduct energetic financial coverage has already been very restricted. From this attitude, euro space accession is just not a lack of autonomy, however a strategic improve. For the primary time, we may have a voice in shaping the euro space’s financial coverage by means of participation within the ECB’s decision-making our bodies. It is a substantial institutional achieve. On the similar time, the BNB retains full management over macroprudential coverage, which stays a strong and versatile device. Our participation within the Single Supervisory Mechanism additional enhances coordination and oversight. This transition is just not about dropping devices—it’s about modernizing and embedding them inside a stronger and extra built-in coverage framework.

GF: One of many BNB’s most vital duties is and can stay financial institution regulation. What affect would possibly euro membership have on Bulgaria’s banks?

Radev: Since 2020, Bulgaria has been a part of the Banking Union by means of the shut cooperation framework with the ECB, overlaying each the Single Supervisory Mechanism (SSM) and the Single Decision Mechanism. Euro space membership will full this integration. It brings greater requirements of supervision, enhanced transparency, and higher consistency throughout the banking sector. Bulgarian banks are already topic to joint supervision beneath the SSM, and expectations—particularly concerning capital power and governance—will proceed to rise. Some consolidation could observe, significantly amongst smaller or much less aggressive establishments. However this displays broader market dynamics, not the euro itself. The BNB’s position stays unchanged: to safeguard monetary stability, shield depositors, and promote the long-term soundness of the banking system.