Bulgaria’s accession to the eurozone and the adoption of the world’s second most used currency is a long-anticipated process. This step will positively impact our economy and will be a driver for accelerating reforms, increasing prosperity, and reaching at least the average European living standards. It will offer numerous benefits to citizens and companies, not only by reducing transaction costs but also by improving the investment environment, activating local and foreign investments, with increased investment activity expected to support employment.

Eurozone membership will offer another benefit. Because of the expiring derogation, banks must allocate capital for purchasing Bulgarian government securities in euros and for holding euro deposits at Bulgarian National Bank (BNB), which is highly illogical given that we have been in a currency board for over 25 years.

This year, the effect is estimated at approximately BGN400m (€205m) of additional capital, and next year it is expected to double. Instead of guaranteeing risk-free loans to the state, this capital could enable us to increase loans to the real economy by several billion leva.

Adopting the euro is expected to boost Bulgaria’s international trade

The ECB will be able to act as a lender of last resort, minimising the risk of bank failures due to a liquidity crisis. Bulgaria will have the opportunity to participate in the decision-making process regarding monetary policy, instead of just being a silent bystander. Although all banks in Europe follow the same laws and regulations, being outside the eurozone, we bear the burden without the benefits.

Adopting the euro is expected to boost Bulgaria’s international trade, especially in agriculture, services, and tourism, as well as in certain manufacturing sectors where Bulgaria has already established strong positions within the EU networks.

In the Association of Banks in Bulgaria, we plan to launch an educational campaign among citizens, for which we count on the support of BNB and the government, to explain all the benefits of adopting the euro, which will significantly improve the business environment for everyone. Banks, businesses, and the state must unite to communicate clearly and help our clients, our employees, and the society navigate through the abundance of information and counteract misinformation, enabling everyone to understand the advantages of adopting the euro. The euro has already become a part of our daily lives, with a significant portion of real estate prices listed in euros, and Bulgarian citizens frequently conducting transactions in this currency.

All systems go
Together with other member banks of the Association of Banks in Bulgaria, we have even more initiatives in the field of environmental protection, social policies, and corporate governance, the so-called ESG. The role of banks is primarily to focus on the areas where we can have the most significant impact to achieve positive effects. Banks are key players in the green transformation, accelerating the path to climate neutrality not only through the decarbonisation of our operations but also through prioritised financing of our clients’ projects. Environmental protection is the most visible aspect of these initiatives, but it is far from the only one. We lead in promoting good governance practices, women’s participation in management, and the independence of our control bodies. For us banks it is important to meet all requirements and prepare our information systems accordingly. We will invest additional resources in cyber security enhancements and increase security measures, protections against cyber threats such as hacking, malware, or phishing.

Alongside that preparation, the contribution of the banking sector is extremely notable in digital banking. Habits today differ from those of yesterday because life imposes its own dynamics. The accelerated implementation of high-tech solutions enhances the user experience. Thus, we provide our customers with even higher quality, faster, and more efficient banking services because the foundation of banking is the relationship between the consumer and the financial institution. In this process, the major market players have an advantage because we possess the resources and means to implement various technological solutions and ensure even higher quality and efficiency in banking services. Digital cards, virtual wallets, and QR-code payments are all part of the new reality. However, the speed of technological transformation depends on the people in the team. We make significant investments in process re-engineering and human resources to create client-friendly applications that enhance the pleasure of interacting with us. The Phygital model is the future of banking. Hybrid forms of banking, a complex model blending digital and physical services, and consumer experience across different channels and platforms – sequentially, in real-time – are what we do at Postbank and what our clients expect. On the other hand, digital payments play a crucial role in stimulating economic growth, innovation, and consumer convenience.

Finally, the euro adoption is a historic moment, and we are well prepared for this significant step. And if there is a system in the Bulgarian economy that is already in the eurozone in terms of requirements, regulations, good business practices, and behaviour, it is the banking system.

So, I can confidently state that we, the banks, will be ready by January 1, 2025.