20 Years After Joining the EU, Bulgaria Officially Adopts the Euro.  

On Jan. 1, history was made in Bulgaria as it became the 21st country to adopt the single European currency. At midnight of the new year, the small Southern Balkan country, which became an EU member in 2007, completed its membership process, giving up the leva, its national currency that dates back to the late 19th century.

The Bulgarian National Assembly implemented this major change with the desire to lower inflation, given the euro’s reputation as a strong and stable currency whose use would reduce the likelihood of sudden devaluation. Given this stability, the decision will likely increase foreign investors’ confidence in Bulgaria, making Bulgaria more attractive and eligible for business, banking and hosting international companies. An anonymous Bulgarian statesperson stated that “with Bulgaria joining the euro, our economy could become more stable and protect the country during global economic crises.’’ 

Supporters of Bulgaria’s move to the eurozone emphasize that the country would benefit from joining what the Bulgarian Academy of Sciences’ Economic Research Institute professor Rossitsa Rangeolva terms the “club of the rich countries.’’

The traditional New Year’s Eve concert, organized by the Sofia City Hall, gathered thousands of people in Knyaz Alexander Battenburg Square. The same square is also home to the headquarters of the Bulgarian National Bank, on whose facade images of Bulgarian coins were projected, accompanied by a stopwatch that indicated the number of minutes until midnight. After midnight, the projected images became instead symbols of the euro currency. 

However, in a televised speech broadcast a few minutes before midnight, the now-resigned Bulgarian president Rumen Radev expressed his regret that the population was not consulted regarding this highly divisive reform. 

In fact, before the currency change, citizens organized many protests in which they categorically demanded a rejection of the decision. Many Bulgarians feared that the introduction of the euro would lead to an inflationary spiral, given that food prices already increased by 5% in November compared to last year, according to the National Institute of Statistics. 

Bulgarian leaders have sought to reassure the population, promising that joining the eurozone will in fact boost the country’s economy, one of the poorest in the EU, and will further strengthen its ties with the West as protection from Russian influence. In his speech, Radev also declared that “the introduction of the euro is the final stage of Bulgaria’s integration into the European Union.”

The head of the Bulgarian National Bank, Dimitar Radev, expressed confidence in the decision, saying in a video posted on the institution’s website that “the euro is not just an economic decision. It is not just a currency. It is a sign of belonging: proof that your place is not on the periphery, in a space of common central rules, trust and responsibility.’’ Furthermore, President of the European Commission Ursula von der Leyen assured Bulgarians in a statement that “the euro will bring concrete benefits to Bulgarian citizens and businesses,” including by facilitating travel and exchanges and improving market transparency. 

These talks have not fully assuaged citizens’ fears, as some worry for the loss of Bulgarian control over monetary policy as it is relinquished to the European Central Bank in Frankfurt. Senior economist at the Sofia Institute for Market Economics Peter Ganev took this position, stating that “the new law creates a situation in which everyone in the market will try to cover themselves… businesses will act out of fear, raising prices now to avoid being punished later.’’ 

The change has been immediate and efficient. A few minutes after the start of the new year, Bulgarians flocked to the closest ATMs to withdraw their first euro banknotes; under the official conversion rate, 1 euro equals 1.95583 leva. Although the two currencies were to be used simultaneously until the end of January, the National Bank announced that in the first ten days of the month, half of the leva in circulation had already been withdrawn. Furthermore, all accounts in leva were automatically converted to euros, as most banks are now obligated to convert leva into euros without commission until July 1. The National Bank will continue to convert the currencies indefinitely.

Prior to Bulgaria’s shift, Croatia had been the latest country to adopt the euro in January of 2023. Now, considering both the perceived stability of the euro but its weakening of national economic authority, other neighboring countries, such as Romania, are debating whether or not to follow suit.

Written by Alexia Jarnea

Photo Courtesy of Creative Commons