Bulgaria’s Benefits of Joining the Eurozone

Bulgaria is officially set to adopt the euro on January 1, 2026. This is a historical event for the country, and the debate surrounding the decision has been heated.

For more than a decade, there have been talks in Bulgaria about the Eurozone and whether the country is finally ready to join it. The two opposing sides – the one against and the one in favor – have both expressed strong views and opinions. A twin article presenting the opposing viewpoint can be found on our website.

Every state that joins the Union must sign the Treaty on the Functioning of the European Union (TFEU). According to it, Member States should adopt the euro as a primary currency once they meet specific conditions. In accordance with the official European Commission website, “All Member States, except Denmark, which negotiated an opt-out arrangement in the Maastricht Treaty, are legally committed to join the euro area.”  

Bulgaria has been part of the European Union (EU) since 2007. Upon joining, Bulgaria did not meet the needed requirements to join the Eurozone. 

In 2025, the European Commission declared Bulgaria ready to take this next step.

The euro area comprises all Member States of the Union that have replaced their national currencies with the euro. Currently, 20 out of all 27 Members have taken this step.

The main objective of this unified currency is to further integrate Member States and ensure price and economic stability.

 

The Supporting Side

For Bulgaria, joining the Eurozone offers several benefits, both economic and political. 

The primary economic advantages are fixed maximum inflation, an increase in trade investments, and the elimination of most transaction costs.

The major political gains for Bulgaria are obtaining a seat at the table of the European Central Bank (ECB) and having a stronger voice and power to promote Bulgaria’s own position within the Union. 

The Bulgarian representative to the General Council is Dimitar Radev, who is the governor of the Bulgarian National Bank (BNB).

Price and Inflation stability

The European Central Bank has set a clear objective of a 2% inflation “over the medium term.” This means that the ECB aims to keep the average inflation over a period of several years near the 2% mark. 

Price stability is closely linked to inflation – as per the ECB - to achieve price stability, inflation must remain “low, stable and predictable.”

There is some unrest in the Bulgarian public that inflation will skyrocket after the official adoption. Christine Lagarde, the President of the ECB, addressed the issue, stating that these concerns are “entirely legitimate.” 

She went on to add: “Currency changeovers can produce a temporary uptick in measured inflation, often when firms round up prices during conversion.”

As per the official European Commission website, “On average, past euro changeovers have led to a very small and one-off increase in prices, ranging from 0.1% to 0.3%. Over time, however, the euro has a price-stabilising effect.”

 

Lower Transaction costs

The constant exchange of Bulgarian lev to other currencies may not seem like a significant problem. It is not, at least not for individuals and one-time occasions. 

The business sector, however, experiences consequential money losses as a result of currency exchanges. Businesses usually trade with foreign companies, and most of the monetary transactions are not conducted in Bulgarian leva.

Most widely accepted international trade currencies are the Euro, the US Dollar, and the British Pound. Therefore, when Bulgarian companies trade internationally, they must exchange the lev for some of those currencies. This results in significant money losses. 

Adopting the euro will eliminate almost all of those conversion costs and allow companies to use this capital for the expansion of their business.

Christine Lagarde acknowledged these benefits, saying: “For Bulgarian firms, that means zero conversion costs when exporting to their primary European customers. Small and medium-sized enterprises will save around one billion levs every year in conversion costs alone.”

 

Trade investments

In the words of Lagarde: “Adopting the euro will also open the door wider to European capital markets. It will lower funding costs and provide a more stable basis for long-term investment.”

Fitch Ratings and S&P Global Ratings, two of the world’s major credit-rating providers, have upgraded their rating of Bulgaria to BBB+. 

This rating characterizes Bulgaria as having a “stable outlook,” indicating the country is a relatively safe investment-grade borrower with moderate risk. 

This achievement is a direct result of the country’s adoption of the euro, and has a strong potential to attract foreign investors to the country. 

 

 

EU Integration

Adopting the euro as the official currency is a major step Bulgaria is taking to further integrate itself into the European Union.  

As a member of the Eurozone, Bulgaria now has a voting seat in the ECB’s Governing Council. This means the Bulgarian representative to the Council will directly express the country’s position on monetary and other issues under the ECB’s jurisdiction.

Having a seat in the Council means Bulgaria will now have the ability to advocate for its own stance on monetary matters as opposed to simply following the ECB’s decisions without any input. 

As Lagarde expressed, “Bulgaria will have a view, a voice, a vote.”

The President of the European Commission, Ursula von der Leyen, shared her position: “Thanks to the euro, Bulgaria's economy will become stronger, with more trade with euro area partners, foreign direct investment, access to finance, quality jobs and real incomes.”

 

 

Edited by: Kaloyan Ivanov and Vasil Paskov