Speech by ECB President Christine Lagarde at the high-level meeting on “Bulgaria, the gateway to the eurozone” co-organized by the Bulgarian Ministry of Finance and the Bulgarian National Bank
Sofia, November 4, 2025
As of January 1, 2026, Bulgaria will officially adopt the euro. While it can seem like a sudden shift, it’s really the culmination of a much longer process.
Bulgaria has been part of Europe’s monetary narrative for quite some time.
The journey has seen the country move from using the Lefpeg in the late 19th century to the French Franc and then the Deutsche Mark in the late 20th century. Each time, Bulgaria has always gravitated toward Europe when given the opportunity.
Now, by embracing the euro, Bulgaria is making significant strides towards joining the European monetary union, solidifying its place in Europe.
But with big historical moves come questions, and understandably, some anxiety.
Paciy Hilendarski, whose image will soon grace Bulgaria’s 2 euro coin, once said, “Bulgarians, don’t forget yourself. Know your relatives and your language.”
It’s only natural for some people to feel that adopting the euro means losing a bit of the independence they’ve fought hard to maintain.
Yet, the sentiment captured in Bulgaria’s motto “Unite and Stand Strong” reflects more than unity; it embodies the spirit of the nation. Joining the eurozone doesn’t erase its identity. In fact, it reinforces Bulgaria’s pride, sovereignty, and commitment to Europe.
Benefits of the euro for Bulgaria
The euro offers Bulgaria two key advantages: prosperity and security.
First, let’s talk about prosperity.
Bulgaria has made impressive progress on its path to fully integrating into Europe. Over the last decade, the GDP per capita has escalated from one-third of the euro area’s average to nearly two-thirds.
This success stems from strong connections to the European, and by extension, the Eurozone economy. Presently, about 65% of Bulgaria’s exports head to other EU nations, with 45% going to the Eurozone specifically.
The Monetary Board has previously granted Bulgaria the benefits of exchange rate stability that comes with eurozone membership. However, adopting the euro will eliminate the last monetary roadblock within this single market.
For businesses in Bulgaria, this translates to zero conversion costs when dealing with significant European partners. Small and medium-sized enterprises could save around 1 billion Leva each year in conversion expenses alone.
Take the automotive sector. It accounts for about 80% of the electronic components in European cars. This means companies can devote time and resources to growth rather than currency conversion.
Furthermore, the euro will create even more access to European capital markets. This can lower financing costs and provide a more reliable basis for long-term investments.
The signs of this are already apparent, as seen in Bulgaria’s improved credit rating and narrowed sovereign spreads, which equates to reduced borrowing costs across the board.
These foundations allow Bulgarian firms to keep investing, innovating, and climbing the value ladder. They’ve achieved a lot already.
The second major advantage is security.
In today’s unpredictable landscape, external shocks are more common than ever. In a small, open economy like Bulgaria, where nearly half of jobs rely on external demand, the repercussions can be significant.
The Monetary Board has kept Bulgaria somewhat insulated from euro fluctuations. While this shield is impressive, no protective measure is impenetrable.
History has shown that fixed exchange rate systems can be fragile during turbulent times. The monetary “snake” of the 1970s and the European monetary system faced numerous adjustments amid speculation.
In such circumstances, the institutional integrity of eurozone members acts as a robust safeguard. This guarantees protection against exchange rate swings with Bulgaria’s primary European trading partners and shields local businesses from sharp currency fluctuations that could impact competitiveness.
As the eurozone represents a vast currency area with well-developed financial markets, it’s much more resilient to sudden capital movement shifts compared to smaller economies. To put it simply, the USD/EUR market is about 20 times larger than the EuroFranc or Euroyen markets. And this size leads to lower volatility.
Moreover, the eurozone settles more than half of its imports in its own currency, making it the second most significant currency globally. For Bulgaria, the figure is even higher: around 83% of imported goods will soon be billed in euros. This dynamic helps families and businesses cope with rising import costs when currency values change.
Finally, the erratic nature of global demand emphasizes the importance of regional integration, and a unified currency strengthens those ties. It prevents competitive devaluations that could weaken the local economy.
For instance, during the Great Financial Crisis, the euro fell by about 20% against the U.S. dollar. If individual countries had acted independently, their currencies might have weakened by 14% more, according to ECB analysis.
Such moves could have jeopardized the unity we’ve built. Luckily, thanks to the euro, Europe’s single market remained intact.
In essence, the euro not only bolsters Bulgaria’s prosperity but also enhances Europe’s collective security in a time of growing fragmentation.
Addressing Challenges of Euro Introduction
Despite these advantages, the move to join the eurozone hasn’t been met with universal enthusiasm. Surveys indicate that roughly half of Bulgarians oppose the euro’s introduction, even though some are still undecided.
I genuinely appreciate the concerns of the Bulgarian populace and wish to address the most pressing ones.
The first concern involves fears of losing sovereignty—specifically, the feeling that national monetary policy would be subordinate to European decisions.
This sentiment makes sense, given the Lev’s long-standing status as a symbol of Bulgarian independence. However, joining the euro should be seen as a gain rather than a loss of sovereignty.
For decades, Bulgaria has operated under a monetary board. This means it has, in effect, relied on the monetary policies of larger economies but without having a say in decisions.
Now, that’s about to change. The Governor of the National Bank of Bulgaria will join the ECB Board, possessing equal voting rights and responsibilities as other members.
Bulgaria won’t merely follow. It will actively participate in shaping the dialogue within the world’s third-largest economy.
Additionally, Bulgaria’s economy is already deeply entwined with European supply chains. Its economic cycles are very much in sync with those of the euroarea. When the eurozone sees growth, so does Bulgaria. Conversely, when there’s a slowdown, Bulgaria feels it too.
In this light, adhering to a shared monetary policy should feel more like a natural fit rather than a constraint.
The second worry is that prices might spike after the euro is adopted.
This is a valid concern. Transitioning currencies can sometimes trigger a temporary uptick in inflation as businesses adjust prices.
People often sense rising living costs, even if data doesn’t fully capture it. This feeling often arises from the necessities we focus on most—like food and basic services, which may see faster price increases than overall levels.
That said, with appropriate safeguards, evidence suggests the impact can be manageable.
If authorities display prices in both currencies for a considerable time and monitor the situation closely, as the Bulgarian authorities intend to do, the effect on consumer prices should be minimal and brief.
Historically, this shift led to inflation increases of about 0.2 to 0.4 percentage points. Even in Croatia, which joined during high inflation, the switching effect was similar and faded quickly.
Public sentiment often sees a repetition. Some uncertainty before the switch is normal. Yet, once households and businesses start using the euro daily, and if they know a trusted central bank is behind it, trust in the system increases.
All countries that joined the euro recently noted a jump in public support within just six months post-transition. In fact, current eurozone support is around 83%.
Reflecting on past euro adoptions, it turns out the biggest challenges weren’t about sovereignty or prices going up. Instead, many countries lost momentum for reforms and couldn’t fully tap into the single currency’s benefits afterward.
But that’s entirely within Bulgaria’s control.
Its progress can continue to grow as the nation aligns its institutions with European standards and encourages its businesses to delve deeper into EU value chains.
In previous expansions, countries more integrated into cross-border production networks saw GDP per capita rise nearly 10 percentage points compared to less engaged nations.
The reform drive in Bulgaria is already yielding positive outcomes. The goal now is to ensure that progress doesn’t stall as external pressures diminish after the transition.
By doing so, Bulgaria can leverage its strengths, like competitive labor and land costs, and target a future as a hub for innovation-driven growth.
Conclusion
To wrap up.
Vasyl Levski, Bulgaria’s most celebrated hero, once remarked, “The people’s cause comes first.”
The decision to adopt the euro echoes that sentiment. It will fortify Bulgaria’s economic foundation, bolster its resilience against global shocks, and enhance its sovereignty by granting a larger voice in eurozone discussions.
Given Bulgaria’s established currency peg, the drawbacks of giving up an independent monetary policy are minor, while the advantages—such as trade facilitation, lower financing costs, and price stability—are substantial.
These rewards will especially empower small and medium-sized enterprises as they expand within Europe’s integrated market.
However, benefits don’t just happen by themselves.
If Bulgaria ensures a transparent transition and maintains reform momentum, it can transform convergence into lasting competitiveness, leading to improved living standards for all its citizens.
Bulgaria honors Levski’s vision by adopting the euro. It’s through unity and shared power that this nation not only exists; it is, and perhaps always will be, European in spirit.
Thank you.
