Bulgaria on the euro’s doorstep: in the direction of a shared future

Speech by Christine Lagarde, President of the ECB, on the high-level convention on “Bulgaria on the Doorstep of the Eurozone”, collectively organised by the Bulgarian Ministry of Finance and Българска народна банка (Bulgarian National Bank)

Sofia, 4 November 2025

On 1 January 2026 Bulgaria will undertake the euro as its foreign money. The change will occur in a single night time, however it’s the consequence of a for much longer journey.

Bulgaria has lengthy been a part of Europe’s financial story.

From the lev’s peg to the French franc within the late nineteenth century to its anchor to the Deutsche Mark within the late twentieth century, the nation has at all times appeared in the direction of Europe each time it has had the liberty to decide on its future.

Now, with the adoption of the euro, Bulgaria is taking the ultimate step in the direction of – and its rightful place on the coronary heart of – Europe’s financial union.

Yet each historic step brings questions, and generally fears.

Paìsiy Hilendàrski – quickly to grace Bulgaria’s €2 coin – as soon as urged “Bulgarian, do not forget yourself; know your kin and language.”

Some naturally fear that adopting the euro may imply giving up part of that hard-won independence.

But Bulgaria’s motto – “United we stand strong” – is engraved not solely on its coat of arms, but additionally in its very spirit.

By becoming a member of the euro space, Bulgaria is just not dropping itself. It is reaffirming that it’s proud, sovereign and European.

The advantages of the euro for Bulgaria

Adopting the euro brings two key advantages for Bulgaria: prosperity and safety.

First, prosperity.

Bulgaria’s journey to the guts of Europe has already delivered exceptional beneficial properties. Over the previous decade, GDP per capita has risen from one-third of the euro space common to nearly two-thirds at this time.

This success has been constructed on deep integration into the European financial system – and much more so, into the euro space financial system. Today, 65% of Bulgaria’s exports go to different EU international locations, and 45% go to euro space international locations.

Under its foreign money board, Bulgaria has already loved a lot of the trade price stability that euro space membership supplies. But adopting the euro will take this integration one step additional by eradicating the final foreign money boundaries throughout the Single Market.

For Bulgarian companies, meaning zero conversion prices when exporting to their major European prospects. Small and medium-sized enterprises will save round one billion levs yearly in conversion prices alone.^[1]

Take Bulgaria’s automotive trade, which provides round 80% of digital elements utilized in European automobiles.^[2] Instead of spending money and time on foreign money conversion, these corporations can reinvest in progress.

Adopting the euro can even open the door wider to European capital markets. It will decrease funding prices and supply a extra steady foundation for long-term funding.

These benefits are already seen in Bulgaria’s improved credit score rankings and narrower sovereign spreads, which is able to translate into decrease borrowing prices for everybody.

With these foundations, Bulgarian companies can proceed to take a position, innovate and transfer up the worth chain – as they’ve executed so impressively already.

The second profit is safety.

We live in a much more unstable world, marked by fixed exterior shocks. For a small and open financial system like Bulgaria, the place practically one in each two jobs is dependent upon international demand, that publicity may be notably acute.^[3]

The foreign money board has lengthy insulated Bulgaria by eliminating euro-lev fluctuations. While it’s a sturdy protect, such safety can’t be assumed to be watertight.

History reveals that fastened trade price regimes are weak below stress: the foreign money “snake” of the Seventies and, later, the European Monetary System had been repeatedly realigned amid speculative pressures.

In this setting, the institutional credibility of euro space membership is the strongest safeguard. It supplies full safety towards trade price volatility with Bulgaria’s principal buying and selling companions in Europe and it shields Bulgarian companies from sharp foreign money swings that may erode competitiveness globally.

As a big foreign money space with a lot deeper monetary markets, the euro space is way much less weak to sudden shifts in international capital flows than smaller economies. To put it into perspective: turnover within the US dollar-euro market is round 20 instances greater than in euro-franc or euro-yen markets. This scale brings decrease volatility.^[4]

At the identical time, as a result of the euro is the world’s second most vital foreign money, the euro space pays for greater than half of its imports in its personal foreign money. In Bulgaria’s case, the share is even greater: round 83% of imports are invoiced in what is going to quickly be its personal foreign money. This cushions households and companies from rising import costs when trade charges transfer.

Finally, when international demand turns into much less predictable, regional integration issues much more – and the one foreign money cements that integration. It prevents our inner market from being weakened by aggressive devaluations.

During the good monetary disaster, as an illustration, the euro depreciated by about 20% towards the US greenback. But in keeping with ECB employees evaluation, some international locations may need seen their currencies fall by as much as 14% extra if that they had stood alone.

Such strikes might have threatened the cohesion now we have constructed. But due to the euro, Europe’s Single Market remained stable and united.

In quick, the euro strengthens Bulgaria’s prosperity and reinforces Europe’s collective safety in an more and more fragmented world.

Managing the challenges of adopting the euro

Despite these advantages, the choice to affix the euro space has not been universally welcomed. Surveys present that round half of Bulgarians at present oppose introducing the euro, whereas a small share stay undecided.^[5]

I take the issues of the Bulgarian folks very significantly – and I wish to handle them clearly. Let me converse to 2 of essentially the most urgent.

The first is the concern of dropping sovereignty – the concern that nationwide financial coverage can be subordinated to European choices.

Given the lev’s lengthy historical past as a logo of Bulgaria’s independence, this sense is fully comprehensible. But becoming a member of the euro is just not a lack of sovereignty – it’s a achieve.

For many years, Bulgaria has operated below a foreign money board. In observe, this has meant importing the financial coverage of bigger economies, however with no seat on the desk the place these coverage choices are made.

That will now change. The Governor of the Bulgarian National Bank will sit on the ECB’s Governing Council, with the identical say, the identical vote and the identical accountability as each different member.

Bulgaria will now not passively observe others – it would assist form choices on the earth’s third-largest financial system.

At the identical time, Bulgaria’s financial system has turn into deeply built-in into European provide chains. Its enterprise cycle now strikes carefully in keeping with that of the euro space. When the euro space grows, Bulgaria grows; when it slows, Bulgaria slows.

In this context, a typical financial coverage is just not a restraint – it’s a pure match.

The second concern is that adopting the euro will result in greater costs.

This concern is fully official. Currency changeovers can produce a short lived uptick in measured inflation, typically when companies spherical up costs throughout conversion.

People might also really feel that inflation has risen, even when official information don’t present it. This notion typically stems from the costs we discover most – these of on a regular basis objects reminiscent of meals and primary providers – which might rise sooner than the general value stage.

But when sturdy safeguards are in place, the proof is reassuring.

When authorities show costs in each currencies for a sufficiently lengthy time frame, monitor actively and implement penalties – as these in Bulgaria plan to do – the influence on client costs is modest and short-lived.

In earlier euro changeovers, the influence was between 0.2 and 0.4 share factors. Even in Croatia – which joined the euro space at a time when inflation was already excessive – the changeover impact was about 0.4 share factors, and it shortly light.

Public perceptions present a repeating sequence. Before adoption, uncertainty is pure. But as soon as households and companies start utilizing the brand new foreign money of their every day lives – and see {that a} credible central financial institution is safeguarding value stability – confidence grows.

In each nation that has joined the euro space within the latest previous, public assist elevated markedly inside six months of the changeover. Today, assist for the euro stands at 83% throughout the euro space.^[6]

In reality, after we look again at earlier waves of euro adoption, the best threat international locations confronted was not dropping sovereignty or seeing a rise in costs. It was dropping reform momentum as soon as contained in the euro space and thus lacking out on the complete advantages of the one foreign money.

But this lies fully in Bulgaria’s arms.

If the nation continues to align its establishments with the very best European requirements and helps its companies combine much more deeply into EU worth chains, the beneficial properties will continue to grow.

During earlier enlargement waves, EU international locations that turned extra tightly built-in into cross-border manufacturing networks noticed their GDP per individual rise practically 10 share factors greater than their less-integrated friends.^[7]

Reform momentum in Bulgaria has already delivered spectacular outcomes. The process now’s to lock in that progress to make sure that it doesn’t fade as financing circumstances enhance and exterior pressures ease after adoption.

By doing so, Bulgaria can transcend reaping the advantages of its present strengths – reminiscent of aggressive labour and land prices – and transfer in the direction of changing into a hub for higher-value, innovation-driven progress.

Conclusion

Let me conclude.

Vasil Levski, Bulgaria’s most revered nationwide hero, as soon as stated that “the people’s cause stands above all.”

The resolution to undertake the euro embodies that trigger. It bolsters Bulgaria’s financial foundations, builds its resilience towards international shocks and amplifies its voice in euro space decision-making, thereby strengthening its sovereignty.

Given Bulgaria’s long-standing foreign money peg, the prices of forgoing an impartial financial coverage are minimal, but the beneficial properties are substantial: smoother commerce, decrease financing prices and extra steady costs.

These benefits will notably empower small and medium-sized enterprises as they increase inside Europe’s built-in financial system.

But beneficial properties are by no means automated.

By guaranteeing a clear changeover and sustained reform momentum, Bulgaria can flip convergence into lasting competitiveness, and translate that into greater dwelling requirements for all Bulgarians.

In adopting the euro, Bulgaria is honouring Levski’s imaginative and prescient. It reveals that via unity and shared energy, the nation stands not solely with Europe, however on the coronary heart of Europe.

Thank you.