By John Q. Hosedrinker 
As part of the recent integration, Dimitar Radev, the Bulgarian central bank’s governor, has joined the European Central Bank’s Governing Council. While the transition allows for levs to be used for a short time, change will be given in euros. Despite Bulgaria’s EU membership and the ability to exchange levs, a recent poll indicates mixed public opinion, with concerns over price changes and a lack of readiness for the euro.
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Bulgaria adopts the euro, and it’s a significant shift! It’s been pegged to the euro for quite a while now, decades even, so it’s not a sudden shock. In essence, the Bulgarian lev was already closely tied to the euro’s value, and before this official adoption, the Bulgarian National Bank had little say in the Eurozone’s monetary policy. Now, they get a voice in the governing council of the European Central Bank, which is a major upgrade.
For those of us in neighboring countries, this means one less currency to worry about exchanging. That’s a definite plus! Economically speaking, Bulgaria already had low unemployment rates, and having a strong, stable currency like the euro is expected to give the economy a boost. In fact, adopting the euro is a requirement for all EU member states that meet the criteria, so this was always the inevitable direction. The only country with a permanent opt-out is Denmark.
It’s natural to have mixed feelings, though. There are concerns about potential price increases, which is understandable. Some people worry about a scenario similar to Croatia, where prices in tourist areas skyrocketed after adopting the euro. However, it’s worth noting that price increases are possible with or without the euro, influenced by factors like global inflation and local market dynamics. Many would be happy to have the lower transaction costs, which is an immediate benefit.
A concern raised is that Bulgaria may be making a “bad move to switch to a currency that you have no control over, given the current state of global inflation.” However, Bulgaria’s currency has already been tied to the euro for a long time, so they are, in effect, already tied to many of the same economic pressures as the Eurozone. The euro isn’t necessarily a risk factor here. Another perspective emphasizes that there is “almost no downside for having it other than the cost of the switch itself”.
Some comments touched on the political dimensions of this change. It’s worth noting that the transition had some controversy around it, with some resistance. Yet, the Lev’s stability was largely dependent on being pegged to the euro in the first place, and there are significant benefits that are well-established.
The discussion also highlighted the role of tourism. While price increases might be more noticeable in tourist hotspots, it’s not exclusively linked to adopting the euro. Tourism economics are complex. Thankfully, Bulgaria’s economy isn’t as heavily dependent on tourism as some other countries that have adopted the euro.
There’s excitement too. Some are eagerly anticipating seeing Bulgarian coins in circulation. There are positive signs regarding migration as well. The last full year saw a positive net migration, with people returning home after studying and working abroad. The hope is that this will be a positive influence on the Bulgarian economy.
It’s interesting to consider whether this is “aid integration with our close economic partners, or is it that Bulgaria lacks the discipline to maintain an independent central bank”. The reality is more nuanced. As part of the Eurozone, Bulgaria’s government spending will need to remain within EU limits, which can be seen as either a constraint or a form of economic discipline, depending on your perspective.
Overall, it seems that the overwhelming sentiment is positive. While there are legitimate concerns about price increases and economic risks, the advantages, such as a stable currency, reduced transaction costs, and a seat at the table in Eurozone monetary policy, outweigh the potential downsides for Bulgaria. It’s a significant step forward for Bulgaria.