site.btaBulgaria’s Eurozone Entry Will Bring No Disruption, Says Single Resolution Board Chair

During a press conference on bank restructuring (resolution) here on Tuesday, Dominique Laboureix, Chair of the Board of Executives of the Single Resolution Board (SRB), said that Bulgaria's accession to the eurozone in less than three months will not lead to significant changes for banks, depositors, or the Bulgarian National Bank. Laboureix said that the SRB has been working well with the Bulgarian National Bank since 2020, when Bulgaria joined the European banking union, and in close cooperation with the European Central Bank (ECB).

Laboureix said that banks in Bulgaria and their regulation will continue to be carried out in the established manner, and the only change for customers will be the transition from the lev to the euro.

He emphasized that possible macroeconomic effects such as inflation or price changes fall within the competence of the ECB, but no shocks are expected when it comes to the banking supervision and the stability of the system.

The SRB is the body responsible for developing and implementing rules and measures in the event that a credit institution becomes close to insolvent or actually insolvent.the SRB is part of the Single Resolution Mechanism (SRM), which also includes national regulatory authorities, and was introduced 10 years ago in response to the global financial crisis of 2008-2009. The SRB and the SRM are the second pillar of the European banking union, the first being European Banking Supervision, which is responsible for the direct supervision of banks' day-to-day activities.

Bank restructuring, which is the responsibility of the SRB, is a process whereby the competent authority restructures or closes (initiates insolvency proceedings) a bank in serious crisis in a manner that protects the public interest, the stability of the financial system and depositors' funds, without placing an undue burden on the state budget.

Asked by BTA about the prospects for the digital euro, Laboureix warned that the lack of a limit on the funds that can be held in digital wallets could create a risk in times of crisis. Last week, the ECB presented a study indicating that 8.2% of the deposit base in Europe, or around EUR 700 billion, could move into digital euro wallets if the limit on funds held were EUR 3,000.

The expert specified that if there was no ceiling, funds could quickly be transferred from the banking system to the digital euro, which could accelerate the outflow of liquidity in times of stress. That does not mean that the digital euro would create the crisis itself, but it could accelerate the crisis. Laboureix reported that discussions are already underway at the ECB to set limits as part of the future policy decision on the digital euro.