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Bulgaria and the euro

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Title: Bulgaria and the euro  
Author: World Heritage Encyclopedia
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Subject: Enlargement of the eurozone, European Exchange Rate Mechanism, Eurozone, Bulgarian lev, Madara Rider
Collection: Bulgaria and the European Union, Currencies of Bulgaria, Euro by Country
Publisher: World Heritage Encyclopedia

Bulgaria and the euro

Eurozone participation
  7 European Union member states not in ERM II but obliged to join once convergence criteria are met (Bulgaria, Croatia, Czech Republic, Hungary, Poland, Romania and Sweden)
  1 European Union member state in ERM II, with an opt-out (Denmark)
  1 European Union member state not in ERM II, with an opt-out (United Kingdom)
  4 non-European Union member states using the euro with a monetary agreement (Andorra, Monaco, San Marino and Vatican City)
  2 non-European Union member states using the euro unilaterally (Kosovo and Montenegro)

Bulgaria committed to switching its currency, the lev, to the euro upon its joining the European Union in 2007, as stated in its EU accession treaty. The transition will occur once the country meets all the euro convergence criteria; it currently meets four of the five criteria, the exception being its membership for at least two years of the EU's official exchange rate mechanism (ERM II), which it has not yet joined despite the current Bulgarian lev having been pegged to the euro since its introduction in 1999. In 2011 Bulgaria's Minister of Finance Simeon Djankov stated that adoption of the euro would be postponed until after the Eurozone crisis had stabilized.[1] Bulgarian euro coins have not yet been designed, but their motif has been chosen to be the Madara Rider.


  • Selecting the design 1
  • Public opinion 2
  • Convergence criteria 3
    • Joining ERM II 3.1
    • Status 3.2
  • Linguistic issues 4
  • See also 5
  • References 6

Selecting the design

Bulgaria euro coins will replace the current national currency, the lev, once the convergence criteria are fulfilled. As the current lev was fixed to the Deutsche Mark at par, the lev's peg effectively switched to the euro, at the rate of 1.95583 leva = 1 euro, which is the Deutsche Mark's fixed exchange rate to euro.[2] On the occasion of the signing of the EU accession treaty on 25 April 2005, the Bulgarian National Bank issued a commemorative coin with a face value of 1.95583 leva, giving it a nominal value of exactly 1 euro.[3][4]

The Madara Rider was one of the favourites to become the symbol of Bulgaria to be used on the national side of the country's euro coins. Other eminent pretenders for the title ‘Symbol of Bulgaria' were the ancient tradition of the nestinars (Bulgarian fire-dancers), Cyrillic,[5] the Rila Monastery[6] and the Tsarevets medieval fortress near Veliko Turnovo.[6]

As of 17 June 2008, debates about the design of the future Bulgarian Euro coins were held all over the country. They continued until 29 June when a vote decided the symbol to be used on all coins. Bulgarians voted in post offices, gas stations and schools.[7][8]

Finally, on 29 June 2008 it was announced that 25.44% of the Bulgarian voters had chosen the Madara Horseman to be depicted on future euro coins.[9][10][11][12]

Public opinion

According to a eurobarometer poll in April 2015, 55 per cent of Bulgarians are in favor of introducing the euro (an increase of 4 per cent from 2014) while 39 per cent are opposed (a decrease of 6 per cent from 2014).[13][14]

Convergence criteria

The Maastricht Treaty originally required that all members of the European Union join the euro once certain economic criteria are met. In November 2007 the Finance Minister Plamen Oresharski stated that his goal was to comply with all five convergence criteria by 2009 and adopt the euro on 2012.[15]

Besides not complying with the requirement to be an ERM-II member for two years, Bulgaria also did not satisfy the price stability criterion in 2008. Bulgaria's inflation in the 12 months from April 2007 to March 2008 reached 9.4%, well above the reference value limit at 3.2%. However, Bulgaria fulfilled the state budget criterion of only having a deficit at maximum 3% of the country's gross domestic product (GDP). The country had posted surpluses since 2003, which in 2007 was at 3.4% of GDP. At the time, the EC forecast that it would remain at 3.2% of GDP in both 2008 and 2009. Bulgaria also complied with the public debt criteria. During the prior decade the Bulgarian debt had declined from 50% of GDP to 18% in 2007. It was expected to reach 11% of GDP in 2009.[16] Finally, the average for the long-term interest rate during the prior year was 4.7% in March 2008, and thus also well within the reference limit at 6.5%.[17]

A 2008 analysis said that Bulgaria would not be able to join the eurozone earlier than 2015 due to the high inflation and the repercussions of the global financial crisis of 2007-2008.[18] Some members of Bulgarian government, notably economy minister Petar Dimitrov, have speculated about unilaterally introducing the euro, which was not well-met by the European Commission.[19]

The lev is not part of ERM-II, but since the launch of the euro in 1999, it has been pegged to the euro at a fixed rate of €1 = BGN 1.95583 through a strictly managed currency board. In all of the three latest annual assessment reports, Bulgaria managed to comply with four out of the five economic convergence criteria for euro adoption, only failing to comply with the criteria requiring the currency of the state to have been a stable ERM-II member for a minimum of two years.[20][21][22]

Joining ERM II

While Bulgaria has not formally joined the exchange rate mechanism, the ±15% floating band permitted within ERM II is less restrictive than Bulgaria's current strict peg of 1.95583 BGN to 1 EUR. The lev has been pegged to the euro since its launch, and prior to that was pegged on par to the German Mark. While the currency board which pegs Bulgaria to the euro has been seen as beneficial to the country fulfilling criteria so quickly,[23] the ECB has pressured Bulgaria to drop it as it did not know how to let a country using a currency board join the euro. The Prime Minister has stated the desire to keep the currency board until the euro was adopted. However, factors such as a high inflation, an unrealistic exchange rate with the euro and the country's low productivity are negatively affected by the system.[24]

Since 2011, Bulgaria's non-membership of the ERM has been the primary factor that prevented their euro membership, as Bulgaria met the other criteria for euro adoption. Simeon Dyankov, Bulgaria's finance minister, said in September 2009 that Bulgaria planned to enter ERM II in November 2009,[25][4][5][6] but this was delayed. In November 2009, Bulgaria stated that it planned to apply for joining ERM II in early 2010, but was forced to delay its application for at least one year after updated figures put the budget deficit for 2009 at 3.7% of GDP, outside the Maastricht criteria.[26] On 22 December 2009 Dyankov said that the country would apply to join the ERM II in March 2010,[27] but due to a high deficit Bulgaria decided not to apply in 2010.[28] In late 2009, Dyankov said that Bulgaria would apply for ERM II membership by February 2010,[29] however, the application was further later delayed.[30]

In July 2011, Dyankov stated that the government would not adopt the euro as long as the European sovereign-debt crisis was ongoing, but that euro adoption could take place as early as 1 January 2015.[1] According to Deutsche Bank, at the time the government had selected a target date for ERM-II entry of the beginning of 2013.[31] The government reiterated in September 2012 its intention to remain outside the eurozone for as long as the debt crisis remained unresolved; it wanted a clear understanding of the consequences of adopting the euro before making a decision to do so.[32] Bulgaria abstained from entering ERM-II during 2013 and 2014,[33] while restating their position that they were not planning on adopting the euro in the near future.[34]

In January 2015, the new elect Finance Minister Vladislav Goranov said, that it was absolutely possible for Bulgaria to join ERM-II before the term of current government ends in 2018, and that he would begin talks with the Eurogroup to map what sort of preparations the state should undertake to qualify for membership.[35] The former governor of the Bulgarian National Bank, Kolyo Paramov, in office when the currency board of the state was established, believes the euro should be adopted already in January 2018, as this would "trigger a number of positive economic effects": Sufficient money supply (leading to increased lending which is needed to improve economic growth), getting rid of the currency board which prevents the national bank functioning as a lender of last resort to rescue banks in financial troubles, and finally private and public lending would benefit from lower interest rates (at least half as high).[36] The former deputy governor of the Bulgarian National Bank, Emil Harsev, agreed with Paramov, stating that it was possible to adopt the euro already in 2018, and "Bulgaria’s membership in the eurozone will bring only positive effect on the economy" because "since establishing the currency board in 1997, we have been accepting all the negative effects of accession into the eurozone without getting the positive ones (access to the European financial market)".[37]

In July 2015, Bulgaria approved the establishment of a co-ordination council to prepare the country for euro zone membership. The government has stated that among the main functions of the council will be drafting a national plan for the introduction of the euro in Bulgaria, a proposal to the Cabinet to determine the target date for euro adoption, organisation and coordination of the practical preparation of the country for euro membership and management and coordination of the work of the expert working groups. [38]


Bulgaria met 4 out of the 5 criteria in the last convergence report published by the European Central Bank in May 2014.

Convergence criteria
Assessment month Country HICP inflation rate[39][nb 1] Excessive deficit procedure[40] Exchange rate Long-term interest rate[41][nb 2] Compatibility of legislation
Budget deficit to GDP[42] Debt-to-GDP ratio ERM II member[43] Change in rate[44][45][nb 3]
2012 ECB Report[nb 4] Reference values Max. 3.1%[nb 5]
(as of 31 Mar 2012)
None open (as of 31 March 2012) Min. 2 years
(as of 31 Mar 2012)
Max. ±15%[nb 6]
(for 2011)
Max. 5.80%[nb 7]
(as of 31 Mar 2012)
(as of 31 Mar 2012)
Max. 3.0%
(Fiscal year 2011)[48]
Max. 60%
(Fiscal year 2011)[48]
 Bulgaria 2.7% Open (Closed in June 2012) No 0.0% 5.30% No
2.1% 16.3%
2013 ECB Report[nb 8] Reference values Max. 2.7%[nb 9]
(as of 30 Apr 2013)
None open (as of 30 Apr 2013) Min. 2 years
(as of 30 Apr 2013)
Max. ±15%[nb 6]
(for 2012)
Max. 5.5%[nb 9]
(as of 30 Apr 2013)
(as of 30 Apr 2013)
Max. 3.0%
(Fiscal year 2012)[51]
Max. 60%
(Fiscal year 2012)[51]
 Bulgaria 2.4% None No 0.0% 3.89% Unknown
0.8% 18.5%
2014 ECB Report[nb 10] Reference values Max. 1.7%[nb 11]
(as of 30 Apr 2014)
None open (as of 30 Apr 2014) Min. 2 years
(as of 30 Apr 2014)
Max. ±15%[nb 6]
(for 2013)
Max. 6.2%[nb 11]
(as of 30 Apr 2014)
(as of 30 Apr 2014)
Max. 3.0%
(Fiscal year 2013)[54]
Max. 60%
(Fiscal year 2013)[54]
 Bulgaria -0.8% None No 0.0% 3.52% No
1.5% 18.9%

  Criterion fulfilled
  Criterion potentially fulfilled: If the budget deficit exceeds the 3% limit, but is "close" to this value (the European Commission has deemed 3.5% to be close by in the past),[55] then the criteria can still potentially be fulfilled if either the deficits in the previous two years are significantly declining towards the 3% limit, or if the excessive deficit is the result of exceptional circumstances which are temporary in nature (i.e. one-off expenditures triggered by a significant economic downturn, or by the implementation of economic reforms that are expected to deliver a significant positive impact on the government's future fiscal budgets). However, even if such "special circumstances" are found to exist, additional criteria must also be met to comply with the fiscal budget criterion.[56][57] Additionally, if the debt-to-GDP ratio exceeds 60% but is "sufficiently diminishing and approaching the reference value at a satisfactory pace" it can be deemed to be in compliance.[58]
  Criterion not fulfilled

  1. ^ The 12-months average for the annual HICP inflation rate must be no more than 1.5% larger than the unweighted arithmetic average of the similar HICP inflation rates in the 3 EU member states with the lowest HICP inflation. If any of these 3 states have a HICP rate significantly below the similarly averaged HICP rate for the eurozone (which according to ECB practice means more than 2% below), and if this low HICP rate has been primarily caused by exceptional circumstances (i.e. severe wage cuts or a strong recession), then such a state is not included in the calculation of the reference value and is replaced by the EU state with the fourth lowest HICP rate.
  2. ^ The annual average for the yield of 10-year government bonds must be no more than 2.0% larger than the unweighted arithmetic average of the bond yields in the 3 EU member states with the lowest HICP inflation. If any of these states have bond yields which are significantly larger than the similarly averaged yield for the eurozone (which according to previous ECB reports means more than 2% above) and at the same time does not have complete funding access to financial markets (which is the case for as long as a government receives bailout funds), then such a state is not be included in the calculation of the reference value.
  3. ^ The change in the annual average exchange rate against the euro.
  4. ^ Reference values from the ECB convergence report of May 2012.[46]
  5. ^ Sweden, Ireland and Slovenia were the reference states.[46]
  6. ^ a b c The maximum allowed change in rate is ± 2.25% for Denmark.
  7. ^ Sweden and Slovenia were the reference states, with Ireland excluded as an outlier.[46]
  8. ^ Reference values from the ECB convergence report of June 2013.[49]
  9. ^ a b Sweden, Latvia and Ireland were the reference states.[49]
  10. ^ Reference values from the ECB convergence report of June 2014.[52]
  11. ^ a b Latvia, Portugal and Ireland were the reference states.[52]

Linguistic issues

10 euro note from the new Europa series written in Latin (EURO) and Greek (EYPΩ) alphabets, but also in the Cyrillic (EBPO) alphabet, as a result of Bulgaria joining the European Union in 2007.

The Bulgarian language's use of a Cyrillic script and its not straightforward transliteration of the word euro have caused some issues regarding the official use of the language relating to the euro. The European Central Bank and the European Commission initially insisted that Bulgaria adopt the name ЕУРО (i.e., euro), rather than the original ЕВРО (i.e., evro) (from Bulgarian Европа [ɛvˈrɔpa], meaning Europe), claiming the currency's name should be standardised across the EU as much as possible. Bulgaria maintained that its language's alphabet and phonetic orthography warranted the exception.[59] At the 2007 EU Summit in Lisbon the issue was decided in Bulgaria's favour, making евро the official Cyrillic spelling from 13 December 2007.[60][61]

This ruling has affected the design of euro banknotes. The second series of notes (beginning with the €5 note issued from 2013) includes the term "EBPO" and the abbreviation "ЕЦБ" (short for Европейска централна банка, the Bulgarian name of the European Central Bank).[62] The first series had only the standard Latin alphabet "EURO" and the Greek "EYPΩ".

The euro coins only have the Latin "EURO" on their common side. Greek coins include the alternative Greek spelling on the national (obverse) side. Bulgarian coins, therefore, may follow suit, having "EURO" on one side and "EBPO" on the other.

The plural of евро in Bulgarian varies in spoken language – евро, евра [ɛvˈra], еврота [ˈɛvrota] – but the most widespread form is евро – without inflection in plural. The word for euro, though, has a normal form with the postpositive definite article – еврото (the euro).

The word for eurocent is евроцент and most probably that, or only цент [ˈtsɛnt], will be used in future when the European currency is accepted in Bulgaria. In contrast to euro, the word for "cent" has a full inflection both in the definite and the plural form: евроцент (basic form), евроцентът (full definite article – postpositive), евроцентове (plural), 2 евроцента (numerative form – after numerals). The word stotinki (стотинки), singular stotinka (стотинка), the name of the subunit of the current Bulgarian currency can be used in place of cent, as it has become a synonym of the word “coins” in colloquial Bulgarian; just like “cent” (from Latin centum), its etymology is from a word meaning hundred – "sto" (сто). Stotinki is used widely in the Bulgarian diaspora in Europe to refer to subunits of currencies other than the Bulgarian lev.

See also


  1. ^ a b "Bulgaria puts off Eurozone membership for 2015". Radio Bulgaria. 26 July 2011. Retrieved 2 September 2012. 
  2. ^ "Prof. Dr. Ivan Angelov: Bulgaria needs a managed floating exchange rate". Retrieved 2009-01-12. 
  3. ^ Press release of the Bulgarian National Bank, April 21, 2005
  4. ^ Coin catalog : 1.95583 Leva (photos and details)
  5. ^ "Most Probable Symbol of Bulgarian Coins". 
  6. ^ a b "The Sofia Echo – The symbolic meaning of Bulgaria's national symbols". Retrieved 2008-06-18. 
  7. ^ "Bulgaria Debates National Symbol for Euro Coin Design". Retrieved 2008-06-16. 
  8. ^ "Bulgaria singles out new national symbol by June 29". Retrieved 2008-06-18. 
  9. ^ "Bulgaria choses Madara horseman as its symbol". The Sofia Echo. Retrieved 2008-12-03. 
  10. ^ "Bulgaria selected the new euro design". Info Bulgaria. Archived from the original on 20 June 2008. Retrieved 2008-06-30. 
  11. ^ "Bulgaria Chooses Madara Horseman for National Symbol at Euro Coin Design". Sofia News Agency Novinite. Retrieved 2008-07-01. 
  12. ^ "Bulgaria chooses heritage site to adorn euro coins". EU Business. Retrieved 2008-07-01. 
  13. ^
  14. ^
  15. ^ "Bulgaria's budget of reform".  
  16. ^ "First check against euro zone criteria". The Sofia Echo. Retrieved 2008-05-17. 
  17. ^ "The Sofia Echo". Retrieved 17 May 2008. 
  18. ^ "Bulgaria's Eurozone accession drifts away". Retrieved 25 November 2008. 
  19. ^
  20. ^ "Convergence Report May 2012" (PDF). European Commission. May 2012. 
  21. ^ "Convergence Report June 2013" (PDF). European Commission. June 2013. 
  22. ^ "Convergence Report June 2014" (PDF). European Commission. June 2014. 
  23. ^ "Bulgaria could join euro zone ahead of other eu countries". 
  24. ^ "said to pressure Bulgaria into discontinuing currency board.". 
  25. ^ (17 September 2009). "Bulgaria to seek eurozone entry within GERB's term – Finance Minister". Sofia Echo. Retrieved 26 April 2011. 
  26. ^ "Bulgaria drops goal of ERM2 entry in 2010". The Sofia Echo. 9 April 2010. Retrieved 3 May 2010. 
  27. ^ M3 Web – (22 December 2009). "Bulgaria: Bulgaria to Apply for ERM 2 in March". Sofia. Novinite. Retrieved 31 July 2010. 
  28. ^ "Bulgaria delays eurozone application as deficit soars". 9 April 2010. Retrieved 31 July 2010. 
  29. ^
  30. ^
  31. ^ "Bulgaria: Frontier country report" (PDF). Deutche Bank Research. 23 May 2011. Retrieved 2 September 2012. 
  32. ^ "Bulgaria shelves euro membership plans". 4 September 2012. Retrieved 15 December 2012. 
  33. ^ "Exchange rate statistics: October 2014" (PDF). Deutsche Bundesbank. 16 October 2014. 
  34. ^ "Bulgaria Sees Euro Recovery to Boost Growth Quickly, Kostov Says". Bloomberg. 15 January 2014. 
  35. ^ "Bulgaria says it will start talks to join the euro". 16 January 2015. 
  36. ^ "Joining Euro to Have Positive Impact on Bulgaria's Economy - Experts". Sofia News Agency (Novinite). 19 January 2015. 
  37. ^ "Euro adoption to have only positive effect on Bulgaria: expert". Focus News Agency. 21 January 2015. 
  38. ^ "Bulgaria creates council for preparation for euro zone membership". The Sofia Globe. Retrieved 2015-07-01. 
  39. ^ "HICP (2005=100): Monthly data (12-month average rate of annual change)". Eurostat. 16 August 2012. Retrieved 6 September 2012. 
  40. ^ "The corrective arm".  
  41. ^ "Long-term interest rate statistics for EU Member States (monthly data for the average of the past year)". Eurostat. Retrieved 18 December 2012. 
  42. ^ "Government deficit/surplus data". Eurostat. 22 April 2013. Retrieved 22 April 2013. 
  43. ^ "What is ERM II?". European Commission. 31 July 2012. Retrieved 8 September 2012. 
  44. ^ "Euro/ECU exchange rates - annual data (average)". Eurostat. Retrieved 5 July 2014. 
  45. ^ "Former euro area national currencies vs. euro/ECU - annual data (average)". Eurostat. Retrieved 5 July 2014. 
  46. ^ a b c "Convergence Report May 2012" (PDF).  
  47. ^ "Convergence Report - 2012" (PDF).  
  48. ^ a b "European economic forecast - spring 2012" (PDF). European Commission. 1 May 2012. Retrieved 1 September 2012. 
  49. ^ a b "Convergence Report" (PDF).  
  50. ^ "Convergence Report - 2013" (PDF).  
  51. ^ a b "European economic forecast - spring 2013" (PDF). European Commission. February 2013. Retrieved 4 July 2014. 
  52. ^ a b "Convergence Report" (PDF).  
  53. ^ "Convergence Report - 2014" (PDF).  
  54. ^ a b "European economic forecast - spring 2014" (PDF). European Commission. March 2014. Retrieved 5 July 2014. 
  55. ^ "Luxembourg Report prepared in accordance with Article 126(3) of the Treaty" (PDF). European Commission. 12 May 2010. Retrieved 18 November 2012. 
  56. ^ "EMI Annual Report 1994" (PDF). European Monetary Institute (EMI). April 1995. Retrieved 22 November 2012. 
  57. ^ "Progress towards convergence - Nov. 1995 (report prepared in accordance with article 7 of the EMI statute)" (PDF). European Monetary Institute (EMI). November 1995. Retrieved 22 November 2012. 
  58. ^ "Progress towards convergence - November 1995 (report prepared in accordance with article 7 of the EMI statute)" (PDF). European Monetary Institute (EMI). November 1995. Retrieved 17 March 2013. 
  59. ^ "letter to the editor". The Sofia Echo. 13 November 2006. Retrieved 25 April 2011. 
  60. ^ "Bulgaria wins victory in "evro" battle". Reuters. 18 October 2007. 
  61. ^ byElena Koinova (19 October 2007). Evro" dispute over – Portuguese foreign minister""". The Sofia Echo. Retrieved 25 April 2011. 
  62. ^ "Superimpose – ECB – Our Money". ECB. ECB. Retrieved 12 February 2013. 
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