Financial stability, monetary autonomy and fiscal interference: Bulgaria in search of its way, 1879-1913
The Bulgarian monetary system was established, immediately after it gained independence, at a time in which the very meaning of money was being redefined at an international level, with the diffusion of the gold standard. Within this framework, the possibility of attaining monetary stability in peripheral countries was increasingly associated with the decision to peg their currency to an external reference. Having experienced it already under Ottoman rule, newly independent Bulgaria adopted the bimetallic standard. Without being a member of the Latin Monetary Union, it tried broadly to follow the principles of the convention, yet with some exceptions, the most important of which concerned the limit on silver coinage (Nedelchev, 1940). The absence of such a clause in Bulgaria turned out to be crucial since the financial needs of the recently established state triggered excessive silver coinage which resulted in a persistent agio (BNB, 1929). The interference of fiscal authorities obstructed the Bulgarian National Bank’s ability to manage money in circulation and to secure the monetary stability required by economic development (Avramov, 2007; Bernholz, 2008). The attempts of the Bulgarian monetary authorities to eliminate the agio were unsuccessful until they acquired the right to issue silver-backed banknotes. Soon after that, in 1906, Bulgaria introduced a short-lived typical Gold standard. The objective of this paper is to study the interaction between fiscal and monetary policy in Bulgaria, in the period between independence and the outbreak of the Balkan wars, and the ensuing financial instability resulting in a deviation from the established monetary standard. While the attempts of the Bulgarian National Bank (BNB) to eliminate the agio seem compliant with the concept of financial stability prevailing at that time, fiscal interference in monetary issues was primarily intended to provide extra revenues for government spending in an effort to finance the building and management of the new autonomous state. This study is a continuation of a broader research on the peculiar transition of Balkan countries from the bimetallic system to the Gold standard (Dimitrova and Fantacci, 2009).
|Date of creation:||Mar 2009|
|Note:||The paper was presented at the Fourth Annual SEEMHN Conference hosted by the National Bank of Serbia, 27 March 2009 in Belgrade.|
|Contact details of provider:|| Postal: 12 Kralja Petra St, 11 000 Belgrade|
Web page: http://www.nbs.rs/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kalina Dimitrova, 2011. "Monetary and Fiscal Policies in Bulgaria:Lessons from the Historical Record," Yearbook of St Kliment Ohridski University of Sofia, Faculty of Economics and Business Administration, St Kliment Ohridski University of Sofia, Faculty of Economics and Business Administration, vol. 9(1), pages 89-107, March.
- Mohamed Arouri & Christophe Rault, 2010.
"Oil Prices and Stock Markets: What Drives What in the Gulf Corporation Council Countries,"
CEPII research center, issue 122, pages 41-56.
- Christophe Rault & ohamed El Hedi AROURI, 2009. "Oil prices and stock markets: what drives what in the Gulf Corporation Council countries?," William Davidson Institute Working Papers Series wp960, William Davidson Institute at the University of Michigan.
- Mohamed El Hedi Arouri & Christophe Rault, 2011. "Oil Prices and Stock Markets: What Drives What in the Gulf Corporation Council Countries?," Working Papers 596, Economic Research Forum, revised 07 Jan 2011.
- Mohamed El Hedi Arouri & Christophe Rault, 2010. "Oil Prices and Stock Markets: What Drives what in the Gulf Corporation Council Countries?," CESifo Working Paper Series 2934, CESifo Group Munich.
- Sofia Lazaretou, 2004. "Monetary System and Macroeconomic Policy in Greece, 1833-2003," Economic Bulletin, Bank of Greece, issue 22, pages 33-65, January.
- Sophia Lazaretou, 2005. "Greek Monetary Economics in Retrospect: The Adventures of the Drachma," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 34(3), pages 331-370, November.
- Sophia, 2003. "Greek Monetary Economics in Retrospect: The Adventures of the Drachma," Working Papers 02, Bank of Greece.
- Kalina Dimitrova, 2010. "Monetary and Fiscal Policies in Bulgaria: Lessons from the Historical Record," ICER Working Papers 13-2010, ICER - International Centre for Economic Research. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:nsb:seemhn:3. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Maja Mihovilovic)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.