Bulgaria entered the eurozone with a well-capitalized and liquid banking system, a conservative supervisory tradition and a developed macroprudential framework. This is stated by the BNB Governor Dimitar Radev in his analysis “The Euro is a Framework. Stability is a Choice“, published on the BNB website, quoted by bTV.
Radev notes that this is a national asset, but adds that it should not be taken for granted or gradually spent in search of short-term market share.
The BNB Governor points out that seven months after the introduction of the euro, the first assessment can already be made and it is positive – payments were not interrupted, accounts were converted, available money was secured, and customers were served. Radev adds that this was an operation that affected almost every contract, every account and every cash register in the country, and passed without systemic shocks.
We have reason to be satisfied, but not complacent, Radev believes. According to him, society will not evaluate membership in the eurozone only by the quality of the technical transition, but the assessment will be formed in everyday life - through prices, interest rates, access to credit and the security of savings. The conclusion at this stage is clear - the framework is stronger, and with this our responsibility also increases, the BNB Governor notes.
Radev points out that for the BNB, the next stage means active participation in the Eurosystem, an accurate and understandable explanation of inflation, careful monitoring of the internal credit cycle and maintaining the preventive nature of capital policy. We will change our instruments when the data dictates it, not when momentary pressure makes the change more convenient, he writes.
The BNB Governor notes that the standard for banks is prudent lending, strong management, transparent customer relations and sufficient capital buffers. Eurozone interest rate scenarios should be present in loan pricing and in interest rate risk, liquidity and capital planning. Data and management systems should detect concentrations and related vulnerabilities before they manifest themselves in defaults, he points out.
Radev adds that this is not a program for administrative credit restrictions. He points out that the Bulgarian economy needs financing for productive investments, innovations, energy transformation, infrastructure and higher welfare. The goal is better quality lending - risk-adjusted, supported by sustainable income and able to withstand adverse conditions, Radev points out.
“The measure of success is clear. Inflation must sustainably approach a level consistent with price stability. Credit must support productive growth without creating excessive indebtedness. Banks must maintain their ability to simultaneously absorb shocks and finance households and enterprises“, writes the BNB governor.
Dimitar Radev commented that the transition to the euro was successful, and in his words this is a good start, but only a start and from now on the results will depend on the quality of the decisions and the consistency with which they are implemented. “The euro is a framework. Stability remains a choice“, concludes the BNB governor.