Accounts and interest rates
According to the content of the document, from the date of the introduction of the euro, credit institutions and other providers of payment services will carry out a one-off conversion of all BGN balances on the accounts of their customers into euro, without fees and commissions for the customer and while maintaining the terms of the respective contracts valid before the conversion.
In addition, the new interest rate on variable rate loan agreements cannot exceed the interest rate before the introduction of the euro, which ensures stability for borrowers. In the case of fixed-rate loan agreements, the interest rate remains unchanged after the introduction of the euro.
It has been agreed that from the date of the introduction of the euro onwards, account holders will only be able to withdraw euro, whether at ATMs or bank branches. It is envisaged that all payments, compensation, financial and social benefits as well as pensions will be paid in euros after the euro adoption date. The move marks a key milestone in financial transactions, promising both convenience and stability for customers amid the currency transition.
The transition
The proposed legislation states that the Bulgarian National Bank will facilitate the free and unrestricted exchange of lev banknotes and coins into euro as the official currency from the date of the introduction of the euro onwards. According to the draft, during the first 6 months after the introduction of the euro, banknotes and coins can be exchanged free of charge from levs into euro in banks and selected branches of “Bulgarian Post” AD.
As regards the cash deposit agreements, the terms of these agreements valid before the euro changeover date will be maintained after the changeover, and the interest rate on deposits may not be lower than the interest rate valid before the euro changeover date. This legislative initiative aims to ensure a smooth changeover to the euro and to maintain the financial stability of depositors against the background of the currency conversion.
Prices – in BGN or EUR?
The prices of goods and services will be recorded in both lev and euro from the first month after the Council’s decision on the adoption of the euro until 12 months after the date of introduction of the euro in Bulgaria. The draft legislation proposes that both prices should be clear, legible, unambiguous and easily understandable, with the same font size and format, which does not confuse consumers.
They should be presented together, accompanied by a distinctive symbol or abbreviation allowing easy identification. The final amount payable by the user must also be presented in both currencies on the fiscal vouchers issued. This legislative proposal aims to ensure transparency and easy understanding for consumers during the currency transition period.
Within one month of Bulgaria’s actual entry into the euro area, there will be a period of dual circulation of both the lev and the euro, during which citizens will be able to carry out transactions in both currencies. During this period, traders will be obliged to make change in euro unless they have sufficient immediate liquidity.
After this period, the lev will cease to be legal tender.
The deadline for feedback on the legislative proposal is 24 April 2024. This transitional arrangement is intended to facilitate a smooth changeover to the euro and minimise disruption to economic activities.
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