When a country adopts the euro, the expected consequences for the sharing of the country's monetary sovereignty are always discussed in detail. This includes some concerns, but also expected benefits from adopting the euro, such as the fact that consumers can travel and companies can trade across Europe without having to exchange money.
As with any enlargement of the eurozone, however, Bulgaria's accession entails institutional changes for the Eurosystem. The effects on the capital of the European Central Bank (ECB) and other financial aspects, as well as on voting rights in the Governing Council of the bank after Bulgaria's accession to the monetary union, are explained by David Baez Sira, Legal Advisor at the ECB, and Desislava Deyanova from the Bulgarian National Bank, in a joint analysis published on the ECB blog.
How does Bulgaria's accession affect the capital of the ECB?
The ECB has its own capital, which allows it to operate and maintain its financial independence from political influence - a principle that was explicitly recognised by the Court of Justice of the European Union in the so-called Banka Slovenije case (the central bank of Slovenia, ed.). The national central banks (NCBs) in the EU are the only ones that have a share in the capital of the ECB.
The total subscribed capital of the ECB of €10.8 billion is distributed among all EU NCBs. The share of each NCB is calculated by the ECB on the basis of the capital key, which reflects the share of the respective Member State in the total population and gross domestic product of the EU.
According to the capital key, the share of the Bulgarian National Bank (BNB) in the total is 0.9783 percent, corresponding to €105.9 million. This was the situation even before the country adopted the euro on 1 January 2026.
However, what changed on that date was the amount of the BNB’s paid-up capital that it paid to the ECB. The reason for this is that the NCBs of the non-euro area EU Member States are only required to pay 3.75 percent of their total share in the ECB’s capital as a contribution to the ECB’s operational costs. This means that before joining the Eurosystem, Bulgaria had already paid up just under €4 million.
When it joined the Eurosystem, the BNB had to pay up the remaining 96.25 percent of its subscribed capital, amounting to €101.9 million. As a result, Bulgaria’s accession to the Eurosystem increased the total amount of the ECB’s subscribed capital to €9 billion. This figure reflects the ECB’s total subscribed capital, excluding the amounts that the six non-euro area EU NCBs are not yet required to pay up.
Before joining the Eurosystem, the BNB was not entitled to receive a share of the ECB’s distributable profits and was not required to finance its losses. Now, as a shareholder in the ECB, the BNB is entitled to its full share of the ECB’s profits, in accordance with the capital key. It may also be required to contribute to the coverage of the ECB's losses if the Governing Council so decides, as set out in Article 33.2 of the Statute of the European System of Central Banks and of the European Central Bank (Statute of the ESCB).
In addition, the BNB already receives its share of the income generated by monetary policy operations.
In addition to paying up their share in the ECB's capital, the national central banks of the Eurosystem transfer foreign reserves and contribute to the ECB's reserves and related provisions upon joining the Eurosystem.
The transfer of foreign reserves ensures that the ECB has sufficient liquidity to conduct possible foreign exchange operations. Contributions to reserves, in turn, help to cover part of the funds that the ECB can use to deal with the potential materialisation of risks, in particular those of a financial nature. In this context, the BNB transferred foreign exchange reserves to the ECB in proportion to its share in the subscribed capital.
How the ECB’s decision-making process is changing
The highest decision-making body of the ECB, the Governing Council, is responsible for determining the central bank’s monetary policy. Even before Bulgaria adopted the euro, the BNB Governor attended the meetings of the General Council, which, among other things, considered issues related to the adoption of the euro.
Now that Bulgaria is part of the euro area, Governor Dimitar Radev is a member of the Governing Council, which consists of the six members of the Executive Board and now 21 governors of the national central banks of the euro area. The gradual enlargement of the euro area, and with it the increasing number of members of the Governing Council, has turned decision-making into a complex logistical challenge.
Not all governors have a vote on every decision. As the Economic and Monetary Union has grown over time, it has become important to keep decision-making processes manageable so that important decisions can be taken in a timely manner.
To achieve this, the Statute of the ESCB, which sets out how the ECB operates, limits the number of members of the Governing Council with voting rights to 21 when the number of representatives of the governors of the NCBs exceeds 18.
When Lithuania became the 19th country to join the euro area in 2015, this threshold was reached, which is why a new system of rotating voting rights was introduced. Under this system, the six members of the Executive Board have a vote in all meetings of the Governing Council. All other members of the Governing Council – the 21 governors of the euro area national central banks – share the remaining 15 votes on a random rotation basis, sometimes not exercising their voting rights.
Some governors exercise their voting rights less frequently than others. To take account of both the relative size and economic weight of their countries and the importance of their financial centres, the governors are divided into two groups. Voting rights within each group rotate randomly each month.
The first group consists of the governors of the five largest euro area countries – currently Germany, France, Italy, Spain and the Netherlands – who have four votes. This means that each of these governors does not exercise their voting rights once every five months. In the second group, the inclusion of the Governor of the BNB means that the remaining 11 votes are now distributed among 16 governors, which increases the frequency with which each governor temporarily abstains from voting.
Currently, four governors abstain from voting every month. Regardless of the voting rotation, all members of the Governing Council have the right to attend all meetings, receive all documentation and exercise their right to speak.
The Governing Council takes decisions collectively, on the basis of consensus. In this context, the opportunity to present arguments and participate in the discussion can be as important as the formal right to vote.
In some situations, however, a formal vote is required. In these cases, the Governing Council takes decisions by simple majority. This excludes decisions on certain types of shareholder-related matters, which include the capital of the ECB, the capital key of NCBs for participation in the ECB, the transfer of foreign reserves to the ECB, the distribution of monetary income generated by the NCBs in the performance of the monetary policy function, and the distribution of the ECB’s profits and losses.
For these decisions, the votes in the Governing Council are weighted according to each NCB’s share in the ECB’s paid-up capital, while the six members of the Executive Board have zero voting weight. With the inclusion of the Governor of the BNB in the Governing Council, the BNB’s share is added to the total weight of all Eurosystem NCBs, which slightly reduces the relative voting weight of the other 20 NCBs in these shareholder decisions.
When a country joins the euro area, public attention usually focuses on the impact on the new member. But changes are also taking place behind the scenes. The ECB’s paid-up capital – and therefore its ownership structure – is adjusted each time an EU Member State adopts the euro. When an NCB joins the Eurosystem, the ECB’s decision-making voting system is updated to accommodate the new member. Every time the euro area expands, the ECB also evolves.
*The views expressed in each ECB blog post are those of the author(s) and do not necessarily reflect the views of the European Central Bank and the Eurosystem. The views expressed in this post cannot be interpreted as an official position of the BNB.