ABOUT THE EURO
- What is the Euro Area?
The euro area is a currency union of those Member States of the European Union (EU) that have adopted the euro as their national currency.
All EU Member States are obliged to join the euro area once they meet the convergence criteria for euro adoption. Until then they participate in the Economic and Monetary Union of the EU as a Member State with a derogation. Of the current EU Member States, the only exception is Denmark which has a right of opt-out which has been negotiated at the very beginning of the 1990s.
Currently, the euro is the official currency of 20 out of 27 EU Member States. Together these states constitute the euro area: Austria, Belgium, Croatia, Cyprus, Estonia, Finland, France, Germany, Greece, Italy, Ireland, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.
https://european-union.europa.eu/institutions-law-budget/euro/countries-using-euro_en
https://economy-finance.ec.europa.eu/euro/what-euro-area_en?prefLang=bg
- What are the criteria for euro adoption?
The euro area membership criteria, as defined in the Treaty on the Functioning of the European Union, are:
- The achievement of a high degree of price stability where the average rate of inflation should not exceed by more than 1.5 percentage points that of the three best performing Member States in terms of price stability;
- Government deficit should not exceed 3% of GDP;
- Government debt should not exceed 60% of GDP;
- Observed over a period of one year before the examination, the average nominal long-term interest rate, measured on the basis of the ten-year government bonds denominated in the national currency, should not exceed by more than two percentage points that of the three best performing Member States in terms of price stability;
- Participation of the national currency in the Exchange Rate Mechanism II for a period of at least two years before the examination, without devaluing its central rate against the euro;
- Compatibility of national legislation with EU law, including compliance of the national central bank’s organic law with the Statute of the European System of Central Banks and of the European Central Bank.
https://economy-finance.ec.europa.eu/euro/enlargement-euro-area/convergence-criteria-joining_en
- What are the benefits of the euro?
The euro offers many benefits to the citizens, businesses and economies of the countries that use it. Some of them are:
- the ease with which prices can be compared between the euro area Member States, which boosts competition between businesses, thereby benefiting consumers;
- price stability;
- the euro makes it easier, cheaper and safer for businesses to trade within the euro area and with the rest of the world;
- improved economic stability and growth;
- better integrated, thus more efficient financial markets;
- greater influence in the global economy through the use of the second reserve currency in the world;
- a tangible symbol of European identity.
- Who is responsible for coordinating Bulgaria’s preparation for the introduction of the euro?
The Coordination Council for the Preparation of the Republic of Bulgaria for Euro Area Membership (hereinafter referred to as ‘the Council’) is responsible for organising, coordinating and overseeing the practical preparation of Bulgaria for euro area membership. The Council is also responsible for drawing up, implementing and, if necessary, updating the National Plan for the Introduction of the Euro in the Republic of Bulgaria.
The Council is chaired jointly by the Governor of the Bulgarian National Bank and the Minister of Finance who is the national coordinator of the preparation of the Republic of Bulgaria for euro area membership.
The members of the Council are:
- The heads of the expert working groups and sub-groups: A deputy minister of finance, a deputy minister of economy and industry, the secretary general of the Council of Ministers, the deputy governors of the Bulgarian National Bank and a member of the Financial Supervision Commission (FSC);
- A deputy minister of foreign affairs;
- A deputy minister of justice;
- A deputy minister of e-government;
- A deputy minister of interior;
- The chairperson of the State Agency for National Security;
- A deputy minister of transport and communications.
- What does conducting a single monetary policy of the Eurosystem mean?
The principle of the single monetary policy of the Eurosystem implies centralised monetary policy decision-making by the ECB and decentralised implementation of that policy by the national central banks.
When the new Law on the BNB comes into force as Bulgaria joins the euro area, the BNB Governor will participate in the ECB Governing Council with a voting right on a rotating basis and will vote on the decisions related to the ECB monetary policy. The BNB will implement these decisions in a decentralised way, but based on common standards and rules applicable to all market players in the euro area.
- How will the BNB effectively participate in the formulation of the monetary policy and the governance of the Eurosystem?
As a member of the ECB Governing Council, the Governor of the Bulgarian National Bank will participate in formulating the Eurosystem monetary policy based on the principle of rotation of the voting rights. He will exercise this right and duty in his personal capacity and in compliance with the principles of independence.
According to the accepted practice so far, the ECB Governing Council adopts its decisions by consensus of all its members, and in the rare cases where such consensus cannot be reached, the rotation principle, introduced after 2015 and enshrined in the Statute, is applied. According to that principle, the BNB Governor will participate in about 70% of the votes of the ECB Governing Council just like the governors of the central banks of Austria, Belgium, Luxembourg, Ireland, Portugal, etc. (for comparison, the central bank governors of the five largest EU economies take part in 80% of the votes).