site.btaBulgaria's Central Bank Is as Influential as Any Other Bank in Eurozone - Governor

"Five years ago, the Bulgarian National Bank (BNB) joining the European Banking Union seemed to many a hardly achievable goal," BNB Governor Dimitar Radev recalled, addressing a forum marking the 30th anniversary of the Association of Banks in Bulgaria here on Monday. Bulgaria's central bank joined the Banking Union nearly two years ago. Quoted on the BNB's website, the Governor said that the central bank's voice now carries the same weight as any other bank in the eurozone, regardless of the size of this country's economy or banking sector.

"This means that the BNB and our banking sector are the first public institution and the first economic sector in Bulgaria, respectively, to have joined the eurozone. The BNB shares in decision-making on the most important matters having to do with management and resolution of Europeans banks, including the Bulgarian ones," Radev said.

The Governor stated that his team and he prefer to look forward to the future, even though they see new challenges there. Radev pointed out that political and economic developments in Bulgaria intersect in prices and nothing but prices.

"From the BNB's point of view and considering the anti-inflationary measures, it is of great importance that the State must avoid incurring additional substantial fixed costs that are not matched a steady flow of revenues," Radev warned. He cited two groups of risks that such an approach can be expected to pose: the risk of an inflationary spiral and the need of painful fiscal adjustments in the near future, e.g., through higher taxes or through spending cuts. "Combined with external factors, this would lead to a significantly more complicated macroeconomic environment for Bulgarian banks," the Governor said.

He pointed out that in terms of external factors and their increasing complication due to the war in Ukraine, the decisions of the largest leading central banks, and particularly of the European Central Bank, will be crucial.

During the coming 18 months the BNB will carry out tasks related to Bulgaria's entry into this country's joining the eurozone. Radev promised that, as far as the central bank is concerned, there is sufficient coordination to handle the matters within their competence. "I earnestly hope that the political process, with all its instability and uncertainty, will not block but will eventually support the eurozone accession process."