Bulgaria and the euro

The Bulgarian lev has been on a currency board since 1997, with a fixed exchange rate initially against the Deutsche Mark and subsequently its replacement the euro.

When it joined the European Union in 2007, Bulgaria committed to switching its currency, the lev, to the euro, as stated in the 2005 EU accession treaty.

The transition will occur once the country meets all the euro convergence criteria; at the moment, Bulgaria does not fulfill only one single criterion – price stability (i.e. inflation).

In November 2007, Bulgarian Finance Minister Plamen Oresharski had stated that his goal was to comply with all five convergence criteria by 2009 and adopt the euro in 2012.

[12] Some members of Bulgarian government, notably economy minister Petar Dimitrov, speculated about unilaterally introducing the euro, which was not well-met by the European Commission.

However, factors such as a high inflation, an unrealistic exchange rate with the euro and the country's low productivity are negatively affected by the system.

[21][22][23] In 2011, Bulgaria's Minister of Finance Simeon Djankov stated that adoption of the euro would be postponed until the end of the eurozone crisis.

[26] This approach was supported by former Bulgarian National Bank governor Kolyo Paramov, who had been in office when the state currency board was established.

[30] On taking the presidency of the EU Council in January 2018, Borisov indicated no clarification had been given but announced he was going to pursue applications for both ERM II and Schengen by July 2018 regardless.

[31][32][33][34] Bulgaria sent a letter to the Eurogroup in July 2018 expressing its desire to join ERM II and committing to enter into a "close cooperation" agreement with the European banking union.

[39] In January 2020, IMF Managing Director Kristalina Georgieva said that it was possible for Bulgaria to join ERM II later in 2020 and adopt the euro in 2023.

[43] The reason he gave for this U-turn was the 500 billion euros rescue package to deal with the economic fallout of the coronavirus pandemic, which the finance ministers of the Eurogroup had agreed upon on 10 April.

[44] On 24 April, Fitch Ratings announced that they would probably upgrade Bulgaria's foreign currency issuer default ratings (IDR) between Bulgaria's accession to ERM II and euro adoption: "… Given that the COVID-19 pandemic response is taking up significant resources with regard to political engagement at the EU-wide level, facilitating the Bulgarian lev's ERM2 accession may decline as a relative priority for European institutions.

If concerns about risks ease and the process resumes, this would be supportive of the rating, as underlined by our view that all things being equal, we would upgrade Bulgaria's Long-Term Foreign-Currency IDR by two notches between admission to the ERM II and joining the euro.

"[45]On 30 April 2020, Bulgaria officially submitted documents to the European Central Bank to apply to join ERM II, the first step to introducing the euro.

The ECB was not consulted on this specific change to the Bulgarian law, but were expected to reveal its assessment on this potential issue in its upcoming convergence report scheduled for publication in June 2024.

[75][76] However, outgoing Finance Minister Asen Vasilev stated that preparations were so far advanced that at the current stage a caretaker government could ensure eurozone entry in 2025.

[78] On 26 June 2024, the ECB released their report confirming that the country had failed to comply with the inflation criteria, thus being unable to join the Eurozone on the 1 January 2025 target date.

[79] According to BNB's press website evroto.bg, it is projected that the inflation criteria will be met by the end of 2024, and that if it is, the country will request an off-cycle compliance re-assessment to get approval to adopt the euro as soon as possible.

On August 7, the long-awaited law on the introduction of the euro was adopted, which actually represents the most important legislative act necessary for the smooth running of the process of changing the currency.

[84][85] On 20 August 2024, President Rumen Radev signed a decree[86] promulgating in the Bulgarian State Gazette the law on the euro, with which it officially entered into force.

[89] However, on 23 January 2025, in a speech, Finance Minister Temenuzhka Petkova announced that the country would not submit such a request until the inflation rate criteria had been met, with 0.1% still missing.

[44] Moreover, the fact that the lev is pegged to the euro at a fixed exchange rate also means that Bulgaria cannot devalue its currency in order to make its exports more competitive.

[126] At the 2007 EU Summit in Lisbon, the issue was decided in Bulgaria's favour, making евро the official Cyrillic spelling from 13 December 2007.

On the occasion of the signing of the EU accession treaty on 25 April 2005, the Bulgarian National Bank issued a commemorative coin with a face value of 1.95583 leva, giving it a nominal value of exactly 1 euro.

Other eminent contenders to be the 'symbol of Bulgaria' were ancient traditional nestinars (Bulgarian fire dancers), Cyrillic script,[132] the Rila Monastery[133] and the Tsarevets medieval fortress near Veliko Turnovo.

[141] The design of the euro coins was officially chosen by the Bulgarian National Bank in November 2023,[142] and approved by the Council of the EU in February 2024.