The current situation
Bulgaria has been a member of the European Union since 2007 and has committed to joining the eurozone in the future. In July 2020 the country entered the ERM II exchange rate mechanism, which is a mandatory stage before adopting the euro. In ERM II the Bulgarian lev is pegged to the euro at a fixed rate of 1.95583 BGN to 1 EUR.
Bulgaria initially planned to adopt the euro in 2024, but the timeline was revised because of inflation and other economic factors. The new indicative date for adopting the euro is 2025–2026, provided all the criteria are met.
Conditions for adopting the euro
To join the eurozone Bulgaria must meet the Maastricht criteria, including:
- Price stability – low inflation.
- Exchange rate stability – no sharp fluctuations.
- Public finances – a budget deficit no higher than 3% of GDP and public debt no more than 60% of GDP.
- Long-term interest rates – at the level of stable eurozone countries.
Advantages of adopting the euro
- Reduced currency risk – the need to exchange currency disappears, which simplifies international trade and investment.
- Greater confidence in the economy – attracting foreign investment thanks to the stability of the euro.
- Lower interest rates – loans and mortgages may become more affordable.
- Easier trade – faster settlements with EU partners.
Possible drawbacks
- Rising prices – some countries experienced inflation after adopting the euro.
- Loss of an independent monetary policy – Bulgaria will not be able to manage its own currency rate.
- Transition costs – re-equipping ATMs and accounting systems and changing banknotes and coins.
Conclusion
Adopting the euro in Bulgaria is an inevitable step in the country's European integration. A successful transition, however, requires meeting strict economic conditions. In the coming years the Bulgarian government will work on stabilizing the economy to bring the moment of joining the eurozone closer.