|Author (Corporate)||Cardiff EDC|
Overview and information relating to Bulgaria's intention to join the Exchange Rate Mechanism (ERM II) and the Banking Union, seen as a first stage to full accession to the Eurozone.
Bulgarian authorities sent on 29 June 2018 to relevant stakeholders a letter of intent regarding the country's intention to join the Exchange Rate Mechanism (ERM II) and the Banking Union. The matter was discussed by Eurozone member state representatives, the European Central Bank (ECB) and Denmark at a meeting on 12 July. The stakeholders welcomed the intention of the Bulgarian authorities to put in place the necessary elements for a successful entry into ERM II. In this context, the country took a number of commitments in policy areas which are of high relevance for a smooth transition to, and participation in, ERM II. The ECB and the Commission were set to monitor the effective implementation of those commitments; once a positive assessment was provided, a decision would be taken by the ERM II parties on the formal application of the Bulgaria authorities.
Decision (EU) 2020/1015 was adopted on 24 June 2020 on the establishment of close cooperation between the European Central Bank and Българска народна банка (Bulgarian National Bank). This was published in the Official Journal on 13 July.
On 10 July 2020, relevant stakeholders agreed to include Bulgaria's national currency (lev) in the ERM II. The central rate was set at €1 = 1.95583 leva. The agreement was largely based on the commitment by Bulgarian authorities to join the Banking Union and ERM II simultaneously and the completion by the country of a set of measures, described in their 2018 letter of intent.
This was seen as an important milestone in the country's efforts to join the Eurozone. Bulgaria is required to participate in the mechanism without severe tensions and without devaluing their currency central rate against the euro on their own initiative, for at least two years before the country can qualify to adopt the common currency.
|Subject Categories||Economic and Financial Affairs|
|Subject Tags||Banking Union, Monetary Affairs|
|Keywords||Euro | Single Currency, European Exchange Rate Mechanism [ERM | ERM II]
|Countries / Regions||Bulgaria|
|International Organisations||European Union [EU]|