site.btaFiscal Council of Republic of Bulgaria Comments on First Visible Benefits of Eurozone Entry

With Bulgaria's entry into the eurozone, the minimum reserve requirements (MRR) that commercial banks transfer to the Bulgarian National Bank (BNB)will decrease from 12% to 1%, the Fiscal Council of the Republic of Bulgaria said on Tuesday. In addition, part of the current foreign exchange reserves in the BNB will flow into the country's currency circulation. All this will lead to an increase in the liquidity of commercial banks, because they will have much more funds left for various purposes. These purposes may be:

1.1. Providing additional loans to businesses and households. This, other things being equal, will stimulate consumption and investment, and overall economic growth.

1.2. Given the existing competition between banks and the desire for new and attracting existing clients from other banks, this will result in a reduction in the interest rate on loans.

In addition to the above, a significant part of the current foreign exchange reserves of the Bulgarian National Bank will also be used. They will gradually return to the domestic credit and financial market. This will stimulate the investment process, allow for greater investments in public infrastructure and stimulate economic activity in the country.