Bulgaria Meets All Euro Zone Membership Criteria, Except for the Exchange Rate

Bulgaria and Croatia have fulfilled all euro zone membership criteria, except for the exchange rate criterion. This is stated in the report of the European Commission on the progress of the Member States towards the introduction of the euro.

The Commission monitors seven countries, including Bulgaria, which are legally obliged to introduce the euro. According to the latest report, none of them meets all the formal criteria. But Bulgaria and Croatia hav gone fartherest in the preparation.

Valdis Dombrovskis, European Commission Vice-President for the Euro and Social Dialogue: This is good news for Bulgaria. The European Commission's report is positive because all the nominal criteria for euro area convergence are met - they are related to inflation, fiscal situation, long-term interest rates. Bulgaria has not met the exchange rate criterion because it is not a member of the European Monetary Mechanism. But we welcome the work of Bulgaria for your acceptance in the mechanism and the European Commission is ready to help your country, he said.

According to Dombovskis, funds are provided in the next budget framework to help Bulgaria on the road to the euro. He thinks that one of the obstacles to Bulgaria is related to the harmonization of the laws with the European ones.

This is something that should be done. We have drafted a report on seven countries, and in only one of them the legislation is not fully compatible with the rules of economic and monetary union. In the case of Bulgaria, some changes are in fact required regarding the independence of the Central Bank and the limitation of long-term monetary financing, Dombovskis said.

Bulgaria's accession to the eurozone means acceptance into the banking union. According to Dombrovskskis, this is a new moment in the process of joining the eurozone. It is also connected with an additional assessment of the Bulgarian banking system, which should be done by the European Central Bank.