Bulgaria Officially Asks to Establish Close Cooperation with ECB on Road to Euro Zone

Bulgaria Officially Asks to Establish Close Cooperation with ECB on Road to Euro Zone

Sofia, July 18 (BTA) - The Bulgarian government has mandated the Finance Minister to officially apply for establishing close cooperation with the European Central Bank (ECB) in keeping with Regulation 1024 relating to the prudential supervision of credit institutions. The mandate was made public by Finance Minister Vladislav Goranov after a government meeting Wednesday.

He recalled that on July 12 the government and the central bank sent a letter of commitment setting out the way they see Bulgaria's accession to the euro zone waiting room, ERM II, as a step towards entry in the euro zone. Following that, the ECB is beginning an analysis of the Bulgarian legislation and how it will be adapted to make sure the ECB supervisory decision have legal force and are directly applicable in respect to Bulgarian banks for which the ECB decides it needs to exercise direct supervisory functions, the Minister explained.

The process may take six to twelve months. It will depend a lot on how far the Bulgarian authorities are able to adapt the national legislation and to guarantee the applicability of ECB acts, Goranov explained.

What the government is sending Wednesday, in addition to the official application for establishment of close cooperation with the ECB in respect to banking supervision, is draft revisions to the relevant Bulgarian legislation. "We will set out our views on how the Bulgarian legislation should be changed so as to meet the requirements of the EU regulation," the Finance Minister explained.

He also said that the currency board arrangement and the pegging of the Bulgarian lev to the euro largely restricts the opportunities for the Bulgarian central bank to pursue monetary policy and, thanks to the currency board, it has been fully in the hands of the ECB.

"Joining the euro zone, we will get involved in decision-making with respect to the monetary policy and this is one of the smallest advantages that we will get in addition to the enhanced trust in the Bulgarian economy and the reduction of transaction costs for businesses," said Goranov.

Source: Sofia