The topic of the euro in Bulgaria creates strongly polar opinions and strongly divides our society. What are the risks and benefits of adopting the single European currency, the euro? After the release of the convergence report, Bulgaria expects the green light for the eurozone. Are our people and society prepared for this cardinal change and what can we expect? Are there hidden risks when changing our currency? Dr. Eng. speaks to FACTI. Rosen Tsvetkov, capital markets analyst and former deputy regional governor of Gabrovo (2017-2021).
- Mr. Tsvetkov, why has the topic of the euro caused such a division in Bulgarian society?
- I believe that the topic of adopting the euro has been underestimated by the Bulgarian political elite, and by that I mean the frivolous way in which our elected officials treat such an important change as the change of our currency. In my opinion, the topic has divided society because people feel that the rapid adoption of the euro is not the result of our sovereign decision, but was taken under pressure and foreign pressure. In addition, Bulgaria requested an extraordinary convergence report at a time when the eurozone is, to put it mildly, far from being in a flourishing economic state due to a number of short-sighted political moves.
- What are the benefits of our country's admission to the eurozone?
- The possible benefits, unfortunately, are slowly disappearing. Until recently, the benefit was lower interest rates, but as of today, this is not the case. Since mortgage and new business loans in Europe are on average about 1% higher than those we have in leva. This is largely due to the European Central Bank, which has kept the main interest rate above 4% for about a year. Another benefit that is mainly emphasized is the currency conversion fees that banks will save, but as far as we know from experience, banks will quickly find some new fee with which to compensate for their revenues. Banks would be the biggest beneficiaries of our admission to the eurozone, since the minimum reserve requirement (MRR) according to the BNB regulation is 12%, while according to the European Central Bank (ECB) it is 1%. This difference from the billions of freed reserves would be distributed by the banks in the form of various credit instruments and they would realize even greater profits.
- What are the main risks that could arise after the adoption of the euro?
- The main risks for me are that a Greek scenario is entirely possible in Bulgaria, especially when we have a corrupt political elite that would use easy access to loans through the ECB for all sorts of dubious projects with questionable efficiency. Another reason is our loss of our own monetary policy over our monetary system. I give an example. As I said before, the BNB has a number of tools with which to manage the money supply, one of which is the minimum reserve requirement (MRR) of banks. Another problem is our “hard link” with economies that have a fundamentally different GDP structure, which would require completely different financial policies. And in the eurozone, there is only one policy – that of the ECB, which should be good for everyone, which is, to put it mildly, impossible. Another serious problem is that of prices, since merchants have increased costs for the implementation of the euro, so they will inevitably reflect it in the price of the final product. These costs vary depending on the merchant, but the smallest would be for the implementation of new software, costs for additional accounting, costs for changing cash registers, and others. This creates the ideal environment for speculation, especially in smaller municipalities where there are not an abundance of merchants.
- You mentioned that speculation is possible. Do you think the state is ready to deal with it?
- I don’t think so. I don't know how in an open market economy the state could control speculation, because every trader can prove to them in one way or another that there are real increased costs. We should be especially careful with large chains, because, as we know, they have their own structures, in which they have gathered in the form of various associations, in which they coordinate their common price policies and various marketing strategies. I don't want to think that at the beginning of 2026 Bulgaria, following the example of Croatia, may wake up with price controls on a number of products due to their drastic increase in price. This will simply be a running after the events. We need to be clearly aware of these risks, because - as the Bulgarian people have said: “If the car turns over, there are many roads.“
- I understand that you are skeptical about the adoption of the euro, but is it possible for it to play a positive role for business and society?
- With this political elite - no. Especially in recent years, we have seen a number of corruption scandals and election fraud. Let's not bury our heads in the sand, but let's look soberly, because these are the political circles that will be the big beneficiaries of our entry into the eurozone. They will share the benefits from the projects with Euro credits, and for the people, as always, the belt tightening will remain, because without a solid increase in taxes in the coming years, I don't see how we will get away with it.