Bulgaria’s Path to the Euro: The Role and Legacy of the Currency Board

Enoch, Charles and Gulde, Anne-Marie (2026) Bulgaria’s Path to the Euro: The Role and Legacy of the Currency Board. FINANCIAL AND ECONOMIC REVIEW, 25 (1). pp. 5-26. ISSN 2415-9271 (print); 2415–928X (online)

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Abstract

Bulgaria’s monetary integration with Europe started with the creation of the currency board in 1997. This paper traces how hard constraints on central bank financing and money creation, combined with political consensus forged in crisis, restored credibility, helped to attract investment, and supported deep structural change and privatisation. Despite the early success, however, Bulgaria’s trajectory from crisis stabilisation to EU accession in 2007 and eventually to ERM II entry in 2020 and euro adoption was unusually long, shaped by a combination of persistent pre-crisis imbalances, the global financial crisis and the resulting stricter post-crisis European prudential demands. While Bulgaria’s monetary policy after the creation of the currency board was determined by the anchor currency, euro entry still brings additional gains, such as representation in ECB decisions, lower currency and country risk, deeper financial market access and reduced transaction costs, while remaining costs are mostly transitional. Monetary success, however, does not fully resolve Bulgaria’s broader institutional and demographic challenges.

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