Bulgaria will be ready to adopt the euro as early as 2023 or 2024, after it meets all Maastricht criteria for euro convergence, central bank governor Dimitar Radev said.
"Our expectation, as well as the expectations of our European partners, is that Bulgaria's stay in the Exchange Rate Mechanism (ERM II) will not be a prolonged one. The aim is to demonstrate formal fulfilment of the Maastricht criteria for exchange rate stability - something that the currency board already provides without a problem," Radev said an interview for Noblesse Oblige, a quarterly magazine published by the Bulgarian Industrial Association. The interview was republished by the Bulgarian National Bank (BNB) on Thursday.
According to the BNB governor, the adoption of the euro will not result in an increase of consumer prices in the country. In the long term, prices in Bulgaria as well as incomes are expected to rise as a result of the real convergence of the national economy in the eurozone, he noted.
The eurozone entry would also accelerate and improve the general integration of the Bulgarian financial sector into the eurozone, meaning that local banks will operate in a more competitive environment which will in turn benefit their customers, Radev noted.
In July, the European Central Bank (ECB) said that it is accepting Bulgaria and Croatia to the Exchange Rate Mechanism-II (ERM-II), the mandatory training ground for eurozone membership, and establishing close cooperation with the two countries' central banks, which are also simultaneously joining the EU's Banking Union.
The ECB also said that will start directly supervising five Bulgarian and eight Croatian banks as of October, as part of the two countries' preparations to join the eurozone.
At joining ERM II, the central rate of the Bulgarian currency is set at 1.95583 levs per euro, with a standard fluctuation band of plus or minus 15%, the ECB said back then. The lev has been pegged to the euro at a rate of 1.95583 levs per euro since the euro's establishment in 1999.
In order to apply for eurozone membership Bulgaria needs to meet all Maastricht criteria for euro convergence. The mechanism ensures that exchange rate fluctuations between the euro and other EU currencies do not disrupt economic stability within the single market. It also helps non euro-area countries to prepare for joining the euro area.
Fabio Panetta, member of the executive board of the ECB, said in July that Bulgaria and Croatia need to work further on commitments made prior to their entry into the ERM II. Prior commitments taken by Bulgaria and Croatia in recent years have spurred important reforms that will mitigate risks under ERM II, but these reforms will not fix all the imbalances and vulnerabilities that the two countries are facing, Panetta noted.