In recent years, the BNB and representatives of credit institutions in Bulgaria have repeatedly declared the readiness of the various banking systems for the euro. The impression is that one button has to be pressed and the transition from lev to euro will take place in a second. Is that really true?
In the field of payments and financial market infrastructures, the BNB as a payment system operator, together with the banking community, BORICA AD, the Government Securities Depository at the BNB (GSD) and Central Depository AD have been actively working on preparations for the migration of payments and settlement in euro for several years. In line with the implementation of the BNB commitments under the National Plan for the Introduction of the Euro in the Republic of Bulgaria, several very important projects were completed. One of these projects was completed in 2023, i.e. the joining of the BNB, banks and the euro client payment system BISERA to the Eurosystem’s consolidated TARGET Services platform (TARGET). The joining of GSD, Central Depository AD and banks to the TARGET2-Securities securities settlement platform was a further step towards integration with the euro area.
The BNB, together with the Ministry of Finance, BORICA AD and the banks in the country carried out a large-scale project for the migration of budget payments in BGN to SEPA standards. Since last year, all customer payments in BGN have been made according to the business and technical requirements of the euro area, which will greatly facilitate their migration to SEPA payments in euro.
In July 2024, the project to ensure full SEPA reachability of payments in euro was successfully completed through the BNB’s participation in EBA Clearing’s STEP2 system, enabling banks to make customer payments to over 4,800 payment service providers across all SEPA countries. As of December 2024, the BNB, as the operator of the TARGET-BNB component system, and BORICA AD, as the operator of the BISERA payment system, participate in TIPS, enabling banks and other payment service providers to make domestic and cross-border customer instant payments in euro, as required by the pan-European SEPA Instant Credit Transfer (SCT Inst) scheme of the European Payments Council – credit transfers implemented on a 24/7/365 basis, within a maximum of 10 seconds from debiting the payer’s account until crediting the amount to the payee’s account and receiving the corresponding confirmation by the payer. Customers of banks participating in TIPS can make instant payments in euro to citizens and businesses from 37 countries. The country's banks are actively working on joining TIPS, which will allow maintaining the level of services for banks' customers in terms of instant payments after the adoption of the euro.
The preparation of the migration of card payments to euro-denominated ones and the respective joining of the BORICA card payment system to TARGET by the end of the year is well underway.
In the area of payments and settlement, operational preparations are in their final stages and all activities are completed on time.
What percentage of retail payments are made through cards and other digital channels?
According to the latest update of the payment statistics for Bulgaria as at 30 January 2025 on the ECB’s data portal, the total number of non-cash payments (credit transfers, direct debits, card payments, e-money payment transactions) ordered in Bulgaria by natural and legal persons customers with a payment service provider for 2023 were 572.3 million with a value of BGN 1098.5 billion. For the first half of 2024, the number of payments was 309.4 million, worth BGN 565.5 billion.
The number of card payments initiated electronically remotely or on-site for 2023 were 310.8 million, with a value of BGN 20.0 billion, and for the first half of 2024 their number was 164.8 million, worth BGN 9.4 billion.
What share of the savings of Bulgarian citizens and Bulgarian companies according to the latest data is in euro?
According to monetary statistics, as at the end of February 2025, the euro deposits of the household and NPISH sector accounted for 25% of the sector’s total deposits, and the share of non-financial and financial corporations – 32% of all deposits held by these enterprises, highlighting the fact that the euro is already well accepted among the population and businesses, due to our economic links with the euro area and the EU.
What will be the role of the Department you are in charge of in the BNB after entering the euro area?
The functions of the BNB are clearly defined in the Law on the Bulgarian National Bank. According to the Law on the BNB adopted in February 2024, which will enter into force on the date of adoption of the euro by the Republic of Bulgaria, the main tasks of the BNB include the establishment and operation of efficient payment systems in accordance with European Union law, which includes the operation of the national TARGET-BNB component system, part of the Eurosystem’s TARGET platform integrating the T2 payment system, the TARGET-Securities securities settlement system and the TIPS euro instant transfer system. Other main tasks are the regulation and oversight of the activities of payment system operators, payment service providers and electronic money issuers in the country under the Law on the Payment Services and Payment Systems. As is currently the case, these central bank functions will continue to be part of the responsibilities of the Banking Department.
Upon Bulgaria's accession to the euro area, the Department will participate in the implementation of the Eurosystem's monetary policy by overseeing the fulfilment of minimum reserve requirements held by banks with the BNB. In addition, the BNB will be able to provide emergency liquidity support (ELA) to a solvent bank outside the scope of monetary policy operations, with the Banking Department being responsible for this important central bank function.
Last but not least, the BNB will continue to carry out statistical activities related to the performance of its functions also as part of the national statistical system and to assist the ECB in the collection of statistical information for the purpose of carrying out the tasks of the European System of Central Banks (ESCB).
Do you think consumers and businesses would benefit from a digital euro and what would they be?
The digital euro is another step in the evolution of payments as a result of the "boom" in e-commerce and the increased consumer demand for digital services. The idea of the digital euro is to bring features of cash into the digital sphere, which has many benefits for all actors involved in the payment process – consumers, merchants, banks and the Eurosystem as a whole.
The digital euro will offer consumers and businesses in the euro area a payment solution with the highest standards of confidentiality compared to other payment methods – neither the ECB nor the national central banks will be able to identify the user of the digital euro, nor the subject matter of the purchase or payment itself.
It is envisaged that digital euro payments will be free of charge for consumers. At the same time, the digital euro is also a financial inclusion instrument – it is expected to be designed to meet the needs of persons with disabilities and those who do not have access to a bank account or do not have digital or financial skills.
The digital euro is a pan-European solution that will be adopted across the euro area and will provide merchants with an easier and cheaper alternative to the current fragmented payments market. Traders will be able to receive payments instantly, with no additional fees.
The digital euro is expected to reduce the dependence of the European payment market on foreign companies, which threaten the autonomy and sustainability of European payment services and pose a risk to the monetary sovereignty of the euro area. The digital euro will offer a basis for further innovation and make the European payment market more competitive.