site.btaBNB Governor: Joining Eurozone Is Strategic Shield for Bulgaria

For Bulgaria, euro area accession is both a strategic shield and an enabler of institutional modernization in the context of global economic fragmentation and ongoing uncertainty. This opinion of Bulgarian National Bank Governor Dimitar Radev is part of an article for the biennial academic journal Bulgarian Journal of International Economics and Politics, published in English by the University of National and World Economy.

The article, entitled “Navigating Structural Volatility: Bulgaria’s Strategic Reserve Management and Imminent Euro Area Accession”, examines how structural political and economic volatility is transforming the global environment and what the consequences are for public investors, with a focus on Bulgaria's upcoming accession to the eurozone.

The analysis argues that adopting the euro is not only a stabilising factor but also a strategic necessity against the backdrop of increasing geopolitical and financial fragmentation.

According to the governor of the Bulgarian National Bank, in the contemporary economic system, political and market unpredictability is not a temporary deviation but a persistent feature that shapes the new norm. As a result, the focus should be on institutional stability rather than short-term forecasting.

Bulgaria, as a small and highly open economy integrated into European production and trade chains, is susceptible to external macroeconomic shocks. Although its direct contact with global trade conflicts is limited, the secondary effects through partners such as Germany are significant, according to the article, published in Bulgarian on the BNB website.

According to the analysis, in conditions of heightened uncertainty, Bulgaria's strategic management of foreign exchange reserves demonstrates stability and adaptability.

The currency board regime predetermines a high degree of concentration – over 90% of reserves are denominated in euro, and the remainder mainly in gold. The approach is conservative, and investments in short-term instruments have high credit ratings (minimum AA–).

Joining the eurozone will require strategic adaptation. When the euro is introduced as the national currency, the structure of reserves should be diversified in terms of both currency and assets, Radev points out.

The goal for the BNB is to strengthen the institution’s ability to manage liquidity, protect the value of reserves, and respond effectively to future systemic challenges, the article adds.

Bulgaria’s expected accession to the euro area represents a strategic inflection point, as it will integrate monetary policy into the European Central Bank (ECB) framework; bolster macroeconomic stability, credibility, and investor confidence; eliminate currency mismatch risks and reduce exposure to speculative pressures; and provide access to institutional mechanisms such as the European Stability Mechanism, according to the governor of the Bulgarian National Bank.

In an era where policy uncertainty has become structural, euro area membership offers Bulgaria a critical layer of institutional security and strategic alignment, the analysis states.

The depth of global economic fragmentation and persistent uncertainty require an adequate institutional response. For Bulgaria, euro area accession is both a strategic shield and an enabler of institutional modernization. While joining the eurozone will not eliminate risk, it will furnish Bulgaria with a stronger platform from which to manage it, Radev points out.

The coming period will test the agility and foresight of national institutions. For the Bulgarian National Bank, the strategic priority is clear: uphold stability under the existing framework while preparing for a future where flexibility, coordination, and a long-term perspective are indispensable, the article further states.