Is it possible to adopt the euro as a parallel currency?

The European Central Bank reacted sparingly to the possibility Bulgaria to introduce the euro as a parallel currency before joining the euro area. The finance minister said on June 28 that Bulgaria was in talks with the European Commission and the European Central Bank.

Bulgaria is in talks for the introduction of the euro as a parallel currency

On June 29, the bank responded to BNT briefly: "We do not comment on politicians' statements".

From the general information provided to us, it is clear that there is no practice of parallel use of the euro before full adoption of the currency.

The government also explained to BNT that the idea with the parallel use of the euro and the Bulgarian lev is to avoid stress in the system and for everyone in the chain - banks, fiscal systems, traders to meet the changeover smoothly.

The European Central Bank explains that it is not a practice to use the euro as a parallel currency during the euro area accession process. According to the institution, introducing the euro before joining the monetary union does not meet the basic economic rationale of the Economic and Monetary Union. The stages set out in the Treaty on the way to the adoption of the single European currency cannot be circumvented by its unilateral introduction.

BNT has sought political comment:

"The Bulgarian government has started negotiations with the European Commission and the ECB to examine the possibility of introducing the euro in Bulgaria in parallel with the Bulgarian lev. What does this mean - in shops we will have the option to pay either in lev or euro, whichever currency we prefer, also people will have the option to choose whether to receive their salaries in euro or in lev. The aim is to show the Bulgarian public that it is, in fact, being terribly lied to by 'Vazrazhdane', with all the talk that after the introduction of the euro in Bulgaria, prices in shops will almost double, while wages will be reduced two-fold. The idea is to have a smooth transition, to convince people, we have understood that the big retail chains, the banks have an initial readiness, we are waiting to receive information from the EC and the ECB whether and when this thing can happen.

We are not talking about adopting the euro from today to tomorrow, we are talking about a smooth transition, which is why we want to have a transition period with prices in the two currencies. So that there is no stress in the system, we want everybody along the line - that is employers, banks, fiscal systems, big retailers, all of them to be ready to meet the changeover smoothly."

This would happen with a smooth transition that would not stress the financial system, Sabrutev specifies. The opposition, however, is skeptical of the idea.

Tsoncho Ganev, "Vazrazhdane": "Categorically against, because we have collected 604 thousand signatures for a referendum on whether Bulgaria should enter the euro area in the next 20 years, if the parliament and the parties in parliament do not want to trample on the parties that themselves voted for this, something should be voted in a referendum for a parallel introduction of the euro in Bulgaria."

Rumen Gechev, "BSP for Bulgaria": "It is high time to ban exotic experiments in Bulgaria before we have accurate accounts of what the effects will be on Bulgaria's currency circulation, on deposits and on the behaviour of companies, because such an experiment could lead to a loss of confidence in the Bulgarian lev, ruining the Bulgarian currency. Before we have made a final decision on the eurozone, exotic proposals with Bulgaria's monetary system are absolutely unacceptable if we do not have concrete and clear calculations."

Toshko Yordanov, "There is Such a People": "I don't know if there are legal possibilities to do it, I have to check because the payment of taxes, let's say in the state, is only in levs, Assen Vassilev's idea is not very clear to me, if it can be implemented at all".

GERB-UDF and MRF did not comment on the topic.