Dimitar Radev: Bulgaria on the road to the euro Speech by Mr Dimitar Radev, Governor of the Bulgarian National Bank, at the conference "Bulgaria on the road to the euro", Sofia, 24 February 2023. *** Dear Mr. President, Dear Mr. Prime Minister, Dear Mr. Dombrovskis, Dear Ministers, Dear members of the public, Dear guests, First of all, I would like to thank the Ministry of Finance and Minister Rositsa Velkova for organising this conference. A proper assessment of the current situation related to our path to the euro area will enable us to make the right decisions. For this reason, I will touch on three issues: 1. Assessment of the current situation; 2. Possible solutions; 3. The role of the Bulgarian National Bank (BNB). At this point of time we are rightly talking about inflation, which is one of the nominal criteria for accession, the only one we are currently not fulfilling. Process-wise, legislation is not an insurmountable obstacle. The genesis of the overall delay in the process, however, lies in the political framework and more specifically in the political crisis of the last two years. The ongoing problems with the legislative program and with the domestic factors for high inflation are largely a consequence of the political crisis. As a result of this crisis, the budget process in the country is seriously disrupted. For the past two years, we have not had a clearly defined law on the annual state budget or a realistic macroeconomic framework and medium-term fiscal program.
Our banking sector has reached its historically highest profitability levels. The ratios of capital adequacy and liquidity are above the average for the EU. Consequently, I would propose two brief topics to ponder on:  2/4  BIS - Central bankers' speeches  Just think of it, where would Bulgaria have been if the other economic, and not only economic, sectors had similar results? Also, remember where the BNB and the banking sector were not very long ago, in 2014 and 2015. The turbulences that we went through in those years spread well beyond the boundaries of the banking sector. How did this transformation happen, from the state in which this sector was in 2015 to the state in which it is today. The answer is – extensive and determined reforms leading up to full integration into the nucleus of the EU, what essentially the euro area is. I think this is a completely valid response to the challenges facing the country today. Let me finish on a more prosaic note. What is the BNB doing on this matter now? As you are probably well aware, no formal criteria and requirements apply to the BNB. And how so? Because the BNB and the banking sector have succeeded in fulfilling all these criteria and requirements by 2020. It is precisely the compliance with these formal criteria and requirements that allowed Bulgaria to join the European banking union in 2020, one of the key euro area institutions, and the Exchange Rate Mechanism.