Mr. Radev, how will the work of the Bulgarian National Bank change from 1 January 2026?

If a positive decision is taken on 8 July, from 1 January 2026 the Bulgarian National Bank will become a full member of the Eurosystem. The change will be both institutional and operational. This means that we will participate in the formulation, adoption and implementation of the common monetary policy of the euro area – on equal terms with the other national central banks and the European Central Bank. This is a significant institutional step forward.

At the same time, our major functions – maintaining financial stability, supervising the banking sector, ensuring the operation of payment systems – will remain just as they are and, in some aspects, will be further strengthened under the new framework.

There is much talk that by joining the euro area, Bulgaria will give up some of its sovereignty. What will be the real voice of our country in the ECB’s policy making?

The public debate often overlooks the important fact that Bulgaria has not de facto been pursuing an autonomous monetary policy since the currency board was put in place in 1997. The essential difference now is that by joining the euro area, we are moving from a regime of transmitting the European Central Bank monetary policy decisions to a regime of direct participation in the decision-making process. This means not just institutional integration, but an opportunity to exercise influence – by participating in discussions, shaping policies and exercising voting rights.

As a member of the ECB Governing Council, the Governor of the BNB will have an equal institutional status with the other governors of the euro area central banks. Despite the system of rotating voting rights, all governors take part in the discussions and contribute to the formation of the collective expertise and decisions of the Council.

In this context, it is not about losing sovereignty, but about moving to a new, higher level of participation in the European monetary architecture. Bulgaria will have an institutional voice in a process whose results have even hitherto had a direct impact on the national economy, but until now without the Bank participating in the formulation and making of decisions.

How will the BNB’s role in the management of foreign exchange reserves change?

The BNB will continue to bear the main institutional responsibility for the management of the country’s international reserves, and this role will be further reinforced within the framework of the Eurosystem’s common rules and coordination mechanisms. This is part of the transition to shared monetary sovereignty, in which national competence fits into the supranational architecture.

From a technical point of view, this is one of the more complex aspects of the transition. By joining the euro area, the Bulgarian National Bank will make a capital contribution reflecting its institutional participation in the ECB’s capital and a reserve contribution representing the transfer of a relatively small part of its international reserves, in accordance with the proportions set in the Treaty and the Statute of the ECB. For this participation in the capital and reserves, the BNB will acquire a claim on the ECB, which will entitle it to a share of the income of the Eurosystem. This claim will be treated as an asset in the BNB’s portfolio and accounted for in the formation of the central bank’s own funds and revenues.

The bulk of the international reserves will remain under the direct management of the BNB, and this management will be conducted in accordance with the established principles of liquidity, security and profitability, and in accordance with the Eurosystem framework. In this sense, the BNB retains both the professional capacity and the responsibility for managing our foreign exchange reserves.

When and where will the first Bulgarian euro banknotes be printed?

The production of euro banknotes is centrally coordinated by the European Central Bank, which defines strict standards for quality, security and technological compatibility. The production of euro banknotes is a combined effort by the national central banks of the euro area countries. In order to secure the required quantities for the initial phase, the country will borrow the first deliveries from other national central banks.

In parallel, the BNB will join the joint production pool of the Eurosystem and will start its own production of euro banknotes. All the necessary amounts of banknotes will be provided well before 1 January 2026 so that the changeover to the euro can run smoothly, in an orderly manner and without interruptions in cash circulation.

Banks started preparing for the euro quite early. Do you expect any technical challenges?

The banking sector has indeed demonstrated a high degree of readiness. And this is to be expected given its central role in the changeover process. Of course, such a process always brings technical challenges, especially in terms of system integration, data migration and customer service. These challenges are managed by means of detailed testing schedules, clearly defined coordination, and constant communications. The BNB is playing a pivotal role in this process and is having an active dialogue with all participants.

How will the BNB ensure the smooth circulation of cash, especially in remote areas?

This is a top priority. The euro changeover plan provides for detailed and timely logistical preparations, including the frontloading of euro banknotes and coins to the cash centres of the BNB, commercial banks, and other key players in the monetary system. Particular attention is paid to remote and underserved areas where Bulgarian Posts EAD will have an active role, facilitating the access to the new currency in populated areas with no banking presence.

The month of January 2026 will be the dual circulation period when the lev and the euro will circulate together as legal tender. This transitional phase will make it easier for citizens and businesses to get adapted to the new currency, while ensuring payment continuity and financial stability.

The dual display of prices will begin on 8 August 2025 and will run until the end of 2026. Will price developments be monitored?

Yes. There will be continuous monitoring under the authority of the Council of Ministers and coordinated between the Consumer Protection Commission, the National Revenue Agency, and the Competition Protection Commission. The aim is to ensure that prices are correctly converted and to prevent speculative price rises and unfair trading practices.

The Bulgarian National Bank will support the process within its powers, including with regard to the exchange rate, payment systems and supervision of the financial sector. The European Central Bank’s methodology for monitoring prices during the introduction of the euro will also be used. The process will be transparent, based on systematic data collection and analysis, and will be carried out in close coordination between institutions.

In recent years the BNB has been repeatedly signalling to banks that the real estate market needs to cool down. Do you expect this market to become even more active with the adoption of the euro and increased liquidity?

We are keeping a close eye on this process and in the context of the overall macroeconomic and financial environment. Indeed, reducing minimum reserve requirements from 12% to 1% is a measure that will free up additional liquidity in the banking system. However, this does not mean that this liquidity would automatically get redirected to the real estate market or that credit expansion would accelerate sharply. Commercial banks’ decisions are based on a number of factors, including regulatory requirements, risk assessment, and expected profitability.

On the part of the BNB, we will continue to closely monitor developments in the credit market and, if necessary, we are ready to use the available macroprudential tools to mitigate potential risks. Our guiding principle remains that sustainable credit activity should be based on real economic and financial parameters, such as real income growth, a high degree of solvency of households and businesses and stable employment, rather than on speculative income expectations or irrational behaviour driven by short-term price signals.

The digital euro remains a little-known topic for the Bulgarian citizens. At what stage is the project and what is its purpose?

The digital euro project is currently in a preparatory phase. A decision on its actual implementation has not been taken yet. Its main objective is to provide citizens and businesses with a digital form of central bank money – it will complement cash, not replace it. The digital euro is conceived as a means of adapting the euro to the conditions of the digital economy, with a focus on ensuring the monetary sovereignty of the euro area, the sustainability of the payment system and equal access to secure and efficient payments.

The Bulgarian National Bank will deepen its participation in the Eurosystem discussions on this project. Our position consistently upholds key principles, such as a high level of security, easy access for citizens and businesses, and full respect for personal data protection requirements. The development of the digital euro will be carefully assessed and a subject of wide public discussion in order to ensure stability, trust and transparency in the process.

Putting emotional arguments aside, what are the real benefits and risks of joining the euro area?

The benefits of joining the euro area are substantial and long-term. These include elimination of foreign exchange risk, better financing conditions, greater predictability for businesses and households, and deeper integration into European financial markets. It is also expected to bolster investor confidence, which would foster growth and stability. These are lasting effects that will be manifesting over time.

The risks that exist are mainly short-term and primarily related to inflation expectations, the adaptation of the business environment and the technical preparations of the various participants in the process. Managing risks effectively requires good coordination, consistent actions and active communication both between institutions and with society. Joining the euro area is not an end in itself. It is a logical continuation of the process that started with the introduction of the currency board, went through our membership in the European Union and participation in ERM II and the Banking Union. From an economic and institutional point of view, the direction is clear and we need to follow it with professionalism and responsibility.