Eurozone news: Bulgaria steps up its bid to adopt the euro | World | News


Eurozone ministers agreed on Thursday on a set of commitments for Bulgaria to fulfil before entering the eurozone.

Sofia meets the preliminary criteria to start its bid to adopt the common currency, as its inflation is at low levels, public finances are in a healthy state and its currency, the Bulgarian Lev, is pegged to the euro.

These conditions brought the ministers to “welcome” the intention of Sofia.

In a statement, they said: “We welcome the intention of the Bulgarian authorities to put in place the necessary elements for a successful entry into ERM II.”

But the country is financially at the bottom of the European Union, which it joined in 2007 with Romania, and the troubled waters in which some of its banks swim may put at risk its further inclusion into the bloc. 

Despite its problems, the government is confident it will be able to make significant steps towards the adoption of the euro by July next year.

Bulgarian Finance Minister Vladislav Goranov and the country’s central bank’s governor Dimitar Radev said in a letter of commitments: “We expect to join simultaneously ERM-2 and banking union by July 2019.”

The second step for a nation to enter the eurozone is joining the banking union.

Banking union member countries transfer to EU bodies the powers to oversee their top banks and deal with ailing lenders. 

But in order to get fit for the banking union, Bulgaria will have to adopt a series of financial reforms and strengthened co-operation with the European Central Bank (ECB).

If the country passes the first test under the supervision of the ECB, it will be able to apply to join the European Exchange Rate Mechanism (ERM II).

The ERM II is a system introduce to achieve monetary stability in Europe, and it readies countries to join the euro by limiting exchange rate fluctuations.

Sofia is expected to send a formal request to join the banking union in the coming days, according to ECB board member Benoit Coeure. 

The eurozone ministers’ statement says the assessment of Sofia’s progress in the union should be made “within approximately one year” from its application.

But the length of the process may change, said Mr Coeure.

He said: “If there is need for more time, that could be more than one year.”

Bulgaria is expected to strengthen not only its baking sector ahead of join gin the ERM II but also its anti-money laundering systems, despite not being a formal precondition.

But in a letter to European authorities last month, Sofia committed to fully implement EU anti money-laundering rules and reinforce supervision of the non-bank financial sector. 

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