To the surprise of many institutions and experts, a great part of them of proven experience and repute, BNB’s gross international foreign exchange reserves increased from BGN 24.9 billion as at the end of 2008 to BGN 26.1 billion at the end of 2011. Presently the lev is more than 150% covered with BNB’s international foreign exchange reserves of the highest quality (not even taking into account the government’s deposit). In short, for fifteen years now businesses and citizens have benefited from the predictability and stability resulting from the fixed exchange  2  BIS central bankers’ speeches  rate and the stable Bulgarian banking system. Not lastly, in the past year the current account turned positive after an impressive growth of Bulgaria’s exports for two years in a row (by over 30% annually in each year), and at a growing share in total EU imports. All this offers interesting matter for discussion at a forum like this one. How do adjustments and counteracting “imbalances” in a small and open economy with a currency board fit into orthodox economic theories and explanations from popular textbooks, which are as a rule written about economies quite different from that of Bulgaria, and by authors of a radically different economic background? I am curious as to what conclusion today’s scientific forum will reach.
Dimitar Radev: Decision about the euro is strategic, not conjunctural Interview by Mr Dimitar Radev, Governor of the Bulgarian National Bank, for Investor Digest, October 2019. * * * Mr. Radev, how would you assess the results of the asset quality review that the European Central Bank (ECB) conducted on six Bulgarian banks? How is the subsequent communication with Frankfurt in view of the goal of entering ERM II? The results are not surprising. They correspond to our own assessments. The communication with the ECB was and remains excellent both when it comes to the work related to the asset quality review and stress test, and when it comes to the overall process of preparing to join ERM II, the Single Supervisory Mechanism and the Single Resolution Mechanism. By definition, the parameters of such stress tests are markedly conservative. The ECB’s approach, however, included some quite unlikely scenarios, such as increasing corporate tax to 30% in the next three years. This could be a negative development for countries like Greece with its 28% tax, or Spain with its 25%, but it seems unrealistic for Bulgaria with its 10%. Wasn’t it logical for the European Banking Authority’s methodology, which was developed for the stress tests on the largest Western European banks a year ago, to be adapted to the conditions in Bulgaria? The technical parameters in the methodology of the stress test’s baseline and adverse scenario are the same as those applied across all the member states by the European Banking Authority.