The introduction of the Euro in Bulgaria logically entails a number of changes in the activities of the Bulgarian National Bank (‘BNB’), in connection with which an entirely new BNB Act (‘BNBA’) has been drafted to replace the previous piece of legislation that has been in force since 1997. By virtue of the new BNBA the official currency in the country becomes the Euro from the date specified in the EU Council Decision on the adoption of the Euro by the Republic of Bulgaria.

The purpose of the draft act is to ensure compliance with the Treaty on the Functioning of the EU (‘TFEU’), the Statute of the European System of Central Banks and of the European Central Bank (‘ECB’) and the EU legislation in general.

With the adoption of the new currency, BNB will lose part of its autonomy - its own monetary policy, which will pass to ECB. At the same time, Bulgaria will be included as a voting country in the process of determination of the Euro Area’s monetary policy and will participate in the decisions and processes that shape the European financial and economic system.

With the introduction of the Еuro, Bulgaria will move from a currency board system to participation in a common currency union. The current prohibition of granting loans to public authorities remains in place. However, an explicit exception is foreseen for granting loans to credit institutions (including those that are publicly owned), without the need to fulfil the specific conditions of Art. 33, para 2 of the ‘old’ BNBA. This provision was envisaging that BNB could not grant loans to credit institutions except in connection with liquidity-providing operations in exceptional circumstances.

The draft law explicitly emphasizes the principle of institutional independence. According to Art. 6 thereof, BNB, the Managing Directors and the members of the Board of Directors are independent and may not seek or take instructions from EU institutions, bodies, offices or agencies, from the Council of Ministers or from the governments of other EU Member States, or from other bodies and institutions. BNB will only be accountable for its activities before the National Assembly.

The legal acts of ECB will have direct effect in Bulgaria, as a Euro Area state, and the ECB will also have certain direct powers with respect to some institutions (related to supervisory reporting, approvals of acquisitions of shareholdings in credit institutions, the granting and withdrawal of licences, etc.).