The European Commission and the European Central Bank (ECB) have approved Bulgaria’s adoption of the euro, with the currency switch set to occur on January 1, 2026. This milestone makes Bulgaria the 21st member state to join the eurozone, an area now using the euro currency in 20 countries, with a population of 347 million people.
Bulgaria Meets Key Criteria for Euro Adoption
In its “convergence report,” the European Commission confirmed that Bulgaria met the necessary criteria to join the eurozone, including integration of its economy with the EU and alignment with fiscal and monetary policies. The report assessed Bulgaria’s economic and financial performance, alongside its balance of payments trends, concluding that Bulgaria is ready to adopt the euro.
ECB’s Positive Assessment
In a separate statement, the European Central Bank echoed the Commission’s findings, acknowledging Bulgaria’s dedication to making the required adjustments. ECB Executive Board Member Philip Lane praised the country’s progress and emphasized its readiness for this transition.
Bulgaria’s Long Journey to the Euro
Bulgaria has aspired to adopt the euro ever since it became a member of the European Union in 2007. However, the transition has faced delays, and many Bulgarians have grown skeptical about the benefits of the switch. According to a Eurobarometer poll conducted in May, 50% of Bulgarians are now doubtful about the euro adoption, with concerns that the move could lead to price hikes.
Addressing Price Concerns
EU Economic Commissioner Valdis Dombrovskis acknowledged these concerns, stating that ensuring price transparency and preventing unfair price increases will require focused efforts. He referenced data from previous eurozone expansions, showing that price hikes following similar transitions were minimal, and reassured that such changes are achievable in Bulgaria’s case.
Key Benefits of Euro Adoption
Adopting the euro means more than just using euro banknotes and coins. Bulgaria will also secure a seat at the European Central Bank’s rate-setting Governing Council, giving it a voice in shaping the monetary policy for the eurozone. This is seen as an important step for Bulgaria’s economic integration within the EU.
Next Steps in the Transition
The European Union’s executive body will need to endorse the proposal later this month, with EU finance ministers setting the exchange rate for the Bulgarian lev to the euro in July. The remainder of the year will be dedicated to technical preparations for the transition.
Meeting the Economic Criteria
To secure approval, Bulgaria had to meet several key economic criteria. One of the critical conditions was maintaining inflation within 1.5 percentage points of the three best EU performers. Bulgaria’s inflation rate of 2.8% in April was just within the allowable range. The country also met requirements for its budget deficit, public debt, and long-term interest rates, positioning it well for euro adoption.
Stable Exchange Rate a Key Factor
Another vital requirement for euro adoption is the stability of the national currency. Bulgaria demonstrated this stability by maintaining a fixed exchange rate between the lev and the euro at 1.95583 since the euro’s introduction in 1999, through the Exchange Rate Mechanism II.
Impact on the Eurozone and Remaining EU Countries
Bulgaria’s upcoming entry into the eurozone comes three years after Croatia’s adoption of the euro in 2023. Once Bulgaria joins, only six of the 27 EU countries will remain outside the euro area, including Sweden, Poland, Czech Republic, Hungary, Romania, and Denmark. These countries have either political objections or do not meet the economic criteria for adopting the euro in the near future.
