trending Market Intelligence /marketintelligence/en/news-insights/trending/tjsgw0jyzf9mdekdjxnzia2 content esgSubNav
In This List

Bulgaria fails to meet criteria to join eurozone

Podcast

Street Talk Episode 87

Blog

A New Dawn for European Bank M&A Top 5 Trends

Blog

Insight Weekly: US banks' loan growth; record share buybacks; utility M&A outlook

Blog

Banking Essentials Newsletter 2021: December Edition


Bulgaria fails to meet criteria to join eurozone

Bulgaria's hopes of joining the eurozone dimmed as the European Commission said the country failed to meet the requirements for adopting the euro.

The commission flagged "incompatibilities and imperfections" in the country's central bank independence, which is one of the criteria for adopting the single currency, and the prohibition of monetary financing. There are also concerns over the central bank's integration into the eurozone economy.

The commission also assessed that Bulgaria, the EU's poorest country, experiences macroeconomic imbalances due to vulnerabilities in the financial sector and high indebtedness and nonperforming loans in the corporate sector.

In addition, the commission said the country does not meet the exchange rate requirement, which requires the Bulgarian lev to spend two years in the Exchange Rate Mechanism II.

"In the light of its assessment on legal compatibility and on the fulfillment of the convergence criteria, and taking into account the additional relevant factors, the Commission considers that Bulgaria does not fulfill the conditions for the adoption of the euro," the commission said.

However, Bulgaria does meet the price stability, public finances and long-term interest rates targets for euro membership.

Bulgaria has been hoping to become the 20th member of the eurozone. It intends to join the Exchange Rate Mechanism II in May or June for two years, after which, along with changes to its central bank law, the country will have met all the formal criteria, Reuters reported. However, eurozone countries are not open to accepting Bulgaria amid concerns about the country's widespread corruption and its potential effect on the stability of Bulgarian banks.

Aside from Denmark, which is exempted from using the euro, and Britain, all EU countries are legally required to adopt euro once they meet all the criteria.