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Bulgaria's Path to the Euro: The Role and Legacy of the Currency Board

Author

Listed:
  • Charles Enoch

    (Consultant on Central Bank Issues and Regional Integration)

  • Anne-Marie Gulde

    (Consultant on International Financial and Debt Issues)

Abstract

Bulgaria's monetary integration with Europe started with the creation of the currency board in 1997. This paper traces how hard constraints on central bank financing and money creation, combined with political consensus forged in crisis, restored credibility, helped to attract investment, and supported deep structural change and privatisation. Despite the early success, however, Bulgaria's trajectory from crisis stabilisation to EU accession in 2007 and eventually to ERM II entry in 2020 and euro adoption was unusually long, shaped by a combination of persistent pre-crisis imbalances, the global financial crisis and the resulting stricter post-crisis European prudential demands. While Bulgaria's monetary policy after the creation of the currency board was determined by the anchor currency, euro entry still brings additional gains, such as representation in ECB decisions, lower currency and country risk, deeper financial market access and reduced transaction costs, while remaining costs are mostly transitional. Monetary success, however, does not fully resolve Bulgaria's broader institutional and demographic challenges.

Suggested Citation

  • Charles Enoch & Anne-Marie Gulde, 2026. "Bulgaria's Path to the Euro: The Role and Legacy of the Currency Board," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 25(1), pages 5-26.
    • Handle: RePEc:mnb:finrev:v:25:y:2026:i:1:p:5-26
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    File URL: https://hitelintezetiszemle.mnb.hu/sw/static/file/fer-25-1-st1-enoch-gulde.pdf
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    References listed on IDEAS

    as
    1. Peter Backé, 2009. "The Monetary Integration of CESEE EU Member States: Achievements and Prospects," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 5, pages 73-81.
    2. repec:onb:oenbfi:y:2009:i:0:b:10 is not listed on IDEAS
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    More about this item

    Keywords

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    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Systems; Standards; Regimes; Government and the Monetary System
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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