Any significant change in people’s lives is usually shrouded in myths. This is especially relevant when change affects the money we handle in everyday life, save or invest.

At the beginning of the 21st century, Bulgaria’s preparation to become a member of the EU was also shrouded in myths. From the myth that small and medium-sized businesses in the country will completely go bankrupt under the pressure of competition in the internal market in the EU, to the fact that we will no longer be able to grow our own vineyards or that the Bulgarian cucumbers will have to be at a precisely defined size. All these myths were not only dispelled after Bulgaria’s real membership in the EU from January 2007, but most of them we have already forgotten.

Bulgaria’s preparation to adopt the euro, however, seems to give rise to more myths and fears than EU membership. These myths are of the most diverse nature and in most cases have nothing to do with the reality that is related to the adoption of the single European currency.

Most of these myths are not only characteristic of Bulgaria, but also of the other EU member states that founded the Eurozone more than two decades ago or which later joined it. They are also relevant to other EU member states that are about to adopt the euro.

Nevertheless, some of these myths are mainly characteristic of Bulgaria or have specific features for our country. This is due to the fact that Bulgaria has been applying a currency board for over 25 years, within which the Bulgarian lev was initially fixed to the German mark, and then to the euro.

It is essential that these myths are well explained, as well as the realities behind them. How true they are and how much they are the fruit of fears or ignorance. Most of the myths aim to shake people about the need to join the Eurozone. They present the adoption of the single European currency as risky, unpredictable, harmful and dangerous.

This does not mean that Bulgaria’s future membership in the Eurozone is not associated with risks and challenges. But the difference between myths and real risks is that the former are unreliable or at least exaggerated. It is important that they are challenged with the exact and correct arguments and facts.[1]

For each myth, we will present the most important facts and circumstances that disprove it or at least represent another reality. The list is not exhaustive, but the variety of myths shows even more the need for a good and accessible to people explanatory and communication campaign in connection with the adoption of the euro by Bulgaria.[2]

1. The myth of inflation and double prices

MYTH: Inflation in the country will increase many times. The price of bread, goods and services will at least double. When the new prices are rounded up, wholesalers and retailers will uncontrollably raise prices.

reality: The myth of double or sensitive price rises is the most common and the most common. It is most easily perceived by people and leads to real fears among the population about the introduction of the single European currency. Along with the myth of lowering the standard of living, it is also used most often by Eurosceptics to argue the risks and dangers of adopting the euro. 

This myth seems real, at least because the average price level in the country is much lower than the level of prices in the countries of the Eurozone. There are somewhat reasonable expectations that with the accession to the euro and the increase in convergence with the eurozone, the average price level in Bulgaria will also rise and approach that of the other countries that have adopted the single European currency. However, this will not happen suddenly and is not only related to the introduction of the euro.

At the same time, there are also a number of indisputable facts that make the theory of double the increase in prices immediately with the accession to the Eurozone, at least greatly exaggerated. The problem is that most of these facts can hardly be explained in an accessible way to people. Including because they are related to economic theory or policies.

And at the same time, the fear of inflation reaches people’s minds much more easily. Especially in a country that was on the verge of hyperinflation in the mid-1990s, and is currently experiencing strong inflationary processes.

Some of these undeniable facts, which refute the high inflation rate of accepting the euro, but difficult to understand for wider circles of the population, are:

• It is not possible for a country with high inflation to join the Eurozone because price stability is one of the mandatory criteria for convergence, also laid down in the Maastricht Treaty.
• The European Commission and the European Central Bank (ECB) not only monitor the formal criterion – what inflation is during the reference twelve months, but also analyze the forecast data for future inflation.
• The main purpose of the ECB’s monetary policy is to maintain price stability. As stated on its page, this stability is the best contribution of monetary policy to maintaining economic growth and creating jobs.[3]
• The main goal of the Bulgarian National Bank is also to maintain price stability. As a rule, this is done by ensuring the stability of the national monetary unit and conducting a monetary policy in accordance with the requirements of the Law on the BNB.[4] Even after joining the Eurozone and the transfer of monetary policy to the ECB, the goal of price stability will remain a top priority.
• Even in the short term, prices in the country will slightly increase with the adoption of the euro, due to psychological factors or one-off costs for the introduction of the single currency, in the medium and long term, its implementation is expected to lead to a downward pressure on prices. This is due to greater competition and comparability, smaller transaction, accounting and other business costs that reduce the cost of goods and services, and hence their prices.
• Another factor is the fact that the convergence with the Eurozone is taking place gradually, including and price level. This is a process that takes place within a few decades, before the adoption and after the introduction of the single currency. And it is not a one-time act that appears only when the introduction of the euro. In addition, with an upward development of the economy, even without the adoption of the euro, prices in the country will once again rise and equal those in the Eurozone.
• Fears of higher inflation do not recognize that Member States are introducing special measures to limit it before the adoption of the euro. Without claiming to be exhaustive, some of these measures are: legal and administrative measures by the state authorities, which introduce strict regulations in the reversal of prices from a national currency into a euro, the double announcement of prices in national currency and euro for a certain period of time; Creation of rules for business behavior based on self-regulation, which limits the practices of artificially rising prices due to the adoption of the single currency and others.[5]
• Last but not least, the creation of the euro area and its subsequent expansions prove that the adoption of the euro statistically has a very limited effect on increasing inflation. Analyzes confirm that the inflation effect of the newly joined euro area Member States, which is specifically due to the adoption of the single European currency, is not higher than 0.2 to 0.3 percentage points.[6]

Unfortunately, most of these indisputable economic facts are difficult to understand for the majority of the population. While fears of higher inflation, as well as the decline in the standard of living, which is the next myth, are much more accessible and understandable to people.

An additional problem is the acceleration of inflation in 2021-2022. The main reasons for this are several and there is currently no direct connection with Bulgaria’s preparation for membership in the Eurozone. Some of them refer to the disrupted supply along the COVID-19 pandemic, the increase in the prices of energy raw materials, other consequences of the Russian Federation’s war in Ukraine and many others. Higher inflation over the past one or two years in Bulgaria further fuels people’s fears that the adoption of the euro will be associated with a serious increase in prices.

• The myth of lowering the standard of living

MYTH: With the adoption of the euro, not only will the prices increase at least twice, but wages and incomes will not change. This will lead to a significant lowering of the standard of living.

reality: The reality here is very different, but people’s fears are again understandable and must be challenged with the right arguments. Supporters of this myth most often use the phrase: prices will become “European”, and salaries will remain “Bulgarian”. To answer this myth and people’s fears, the facts must be used again:

• In recent years, incomes have been increasing in the country alongside prices. Statistics prove that in some cases the increase in incomes is ahead of the increase in prices.
• The logic of the adoption of the euro is exactly the opposite of the myth under consideration. The introduction and use of the single currency, other things being equal, leads to a significant increase in the standard of living. The introduction of the single currency is associated with expectations of strengthening economic growth, growth in trade, increase in local and foreign investment, greater employment and less unemployment. All this means more income and an increase in the standard of living.

In order to make the messages in a clear and understandable language, not only economists and financiers who understand the matter, but also specialists in advertising, sociologists, psychologists and others should be involved in the explanatory campaign for the adoption of the euro.[7]

• The myth of economic growth weakening

MYTH: Eurozone accession will lead to stagnation of the economy and slowing the potential for economic growth. 

reality: Expectations, as well as the results of previous accessions, are exactly the opposite. Joining the Eurozone is related to forecasts for growth in trade, investment, employment, and hence an increase in the activity and growth of the economy.

The real data on economic growth and the comparison between the countries of Central and Eastern Europe also prove that this myth is greatly exaggerated and is not true. Comparing economic growth between countries such as Slovenia, Slovakia, Estonia, Latvia and Lithuania, which have adopted the euro, with countries such as Poland, the Czech Republic and Hungary, data are observed showing that the first group has a slightly higher than or equal to the economic growth of The second group.[8]

• The myth of loosening fiscal discipline

MYTH: After joining the Eurozone, Bulgaria will loosen its fiscal discipline. The country will begin to register high budget deficits and increase its indebtedness, like other eurozone countries.

reality: This is one of the myths about the effect of the adoption of the euro on policies in the country, which rests primarily on assumptions. As well as the example of the Greek debt crisis. In reality, EU rules are already much stricter for countries from and outside the Eurozone. In addition to EU-level measures, the private sector and markets have also largely adapted their behavior based on the lessons of the debt crisis. There are several main arguments and policies in the EU that prove that such a scenario as the debt crisis after 2009 is very unlikely, and even in practice almost impossible for Bulgaria:

• Financial and debt markets have learned from the eurozone debt crisis. They are unlikely to again make the same mistake of granting low-interest loans to countries that do not apply strict fiscal discipline. On the contrary, markets increasingly distinguish between euro area countries in determining interest rates on their debt. The more expansive and unbalanced the fiscal policy of the respective member state of the Eurozone, the more its debt and its service increase. This creates market incentives for Member States to return to a more balanced fiscal policy. 
• Excessive budget deficit procedures in the EU They are also an incentive for Member States to strive for a more balanced fiscal policy.
• The package of six legislative acts (Six Pack) and the package of two legislative acts (Two Pack) strengthen the application and effectiveness of the Stability and Growth Pact. It was introduced back in 1997 and has the task of maintaining stricter fiscal discipline. These EU legislative measures also reinforce other EU procedures in the field of macroeconomic policy.
• The introduction of the European Semester in 2011. also influences the implementation of more balanced fiscal policies. The annual mutual monitoring of Member States’ policies and their discussion in the Council of the EU, as well as making recommendations to each country in the Union, has a deterrent effect on excessively expansive fiscal policies.
• The introduction of a procedure for macroeconomic imbalances, which is part of the European Semester, also has a deterrent effect on the emergence and development of excessive macroeconomic imbalances in the EU member states.[9]

All these procedures and measures at EU level, most of which have been introduced since the economic and financial crisis of 2007-2009, seek to limit unreasonable fiscal policies. They apply to both the eurozone member states and those who have not yet joined it. Very often in these procedures, the rules for the Member States of the Eurozone are stricter than they are for EU countries outside this area.

• The myth that they will oblige us to change our exchange rate

Myth: Before we adopt the euro, the EU will oblige us to change the fixed exchange rate of the Bulgarian lev to the euro.

reality: Part of this myth has already been debunked. There were not a few votes that the EU would oblige us to change our fixed exchange rate of the leva to the euro as soon as we join the exchange rate II (ERM II). This turned out to be false, because on July 10, 2020, Bulgaria joined ERM II with a central exchange rate of 1 euro for 1.95583 BGN, which is the fixed rate within the currency board.

Eurosceptics, who seek to instill currency fears, are missing an important fact. The change of this course cannot be done without the consent of the Bulgarian side and no one can oblige us to change it. The decision on the exchange rate with which we will join the Eurozone, similar to the decision on the central exchange rate with which we are part of ERM II, is also made with the participation of Bulgaria.

The main objective of ERM II is to maintain currency stability in the participating countries in order to prepare for joining the Eurozone. Therefore, there is no logic for a well-functioning currency board with a stable exchange rate to be shaken and its fixed exchange rate to be changed. This could lead to the destabilization of the national currency against the euro, which is contrary to the objectives of ERM II.

Last but not least, if the stability of the currency board is preserved until the accession to the Eurozone, which is the goal of the Bulgarian monetary and fiscal authorities, then there is no reason to change the fixed exchange rate either during the participation in ERM II or during the adoption of the single European currency. It is a separate question how there can be instability of the currency board and at the same time join the Eurozone – these are two opposite and incompatible events.

Although it is difficult to make predictions about the exchange rate, the author’s personal forecast is that Bulgaria will join the Eurozone with the current fixed exchange rate of the Bulgarian lev to the euro. The same is the case with the Baltic states, which also have different forms of a fixed exchange rate before joining the Eurozone, using the fixed rates applied up to that point. In addition, the National Assembly of Bulgaria also adopts decisions in this direction, which are in defense of this exchange rate. 

• The myth of spending the foreign exchange reserve of the BNB

Myth: The foreign exchange reserve of the BNB, which in the conditions of a currency board is managed by the central bank in order to maintain it, will be spent by the Bulgarian politicians after joining the Eurozone.

reality: This is one of the relatively specific myths about Bulgaria. Currently, the foreign exchange reserves of the BNB should provide 100% coverage of the monetary base, i.e. of the money in circulation and the deposits of the commercial banks, the government and other depositors in the BNB. The amount of foreign exchange reserves is significant, making up about 27 billion euros (about BGN 54 billion) to  June 2020[10] In practice, these reserves provide well over 150% monetary base coverage and maintain the stability of the currency board. There are claims in the public space that after joining the Eurozone, most of this reserve can be “spent”. There is no lack of speculation that this will be done in an opaque and dubious way.

This myth is one of the most baseless, although to a large part of society it seems plausible. There are several arguments against the fact that the central bank’s foreign exchange reserves can be spent easily:

• When Bulgaria becomes part of the Eurozone, a part of its foreign exchange reserves will be transferred to the foreign exchange reserves of the ECB. On the other hand, a claim from the ECB will arise in the asset of the BNB.
• The BNB will have some freedom to invest its remaining foreign reserves, but according to the EU legal framework, in order to ensure compatibility with the currency exchange rate and monetary policy in the euro area, this investment needs to be carried out in agreement with the ECB.  
• Only one part of the funds in the foreign exchange reserves belong to the state, mostly in the form of a fiscal reserve of the government. These funds are increasing and decreasing according to the needs of the country. A large part of the funds in the foreign exchange reserve of the BNB are from other sources other than those of the government, such as the minimum reserves and excess reserves of banks and other sources.
• The BNB will continue to manage its foreign exchange reserves according to the generally accepted principles of liquidity, security and return. It is the principle of liquidity that requires the BNB to maintain sufficient foreign exchange reserves even after joining the Eurozone.[11]

The arguments for the change of foreign exchange reserves in the BNB apply mainly to the period after joining the Eurozone. The inclusion of ERM II in no way changed the rules of the functioning of the currency board of Bulgaria. In this regard, the strict rules for higher foreign exchange reserves in the BNB were also preserved, with the aim of maintaining the currency board.

• The myth that the eurozone will exceptionally accept an economically undeveloped country

Myth: Bulgaria is so poor, and its economy is so poorly developed that if we are accepted in the Eurozone, it would be due to external factors beyond our control.

reality: This is one of the most wrong myths. There are strict rules and requirements for joining the Eurozone. For membership in it, there is no criterion based on wealth/poverty of the applicant country, for example on the basis of average income per capita. At the same time, the requirements for convergence and the implementation of certain policies are sufficiently strict and are carefully observed.

One of the clearest counter-arguments of such a myth and the thesis of Bulgaria’s weak development and convergence compared to the Eurozone is the share of our foreign trade and foreign direct investment. About half of Bulgaria’s imports and exports are precisely with the EU member states that have already adopted the single European currency. The same applies to the majority of investments in the country. There is no way that half of the country’s exports are for the Eurozone, and the Bulgarian economy is not competitive with the economy of this currency zone. In the same way, there is no way that investors from the Eurozone can trust Bulgaria, but do not trust its economy.

• The myth that Bulgaria has been treated unequally in the adoption of the euro

Myth: Bulgaria is subject to additional conditions in connection with the adoption of the euro, which aims to delay the process of its accession to the Eurozone. Proof of this is the imposition of the condition for joining ERM II to join the EU Banking Union. 

reality: Bulgaria and the other countries joining ERM II and the Eurozone are treated equally with the countries that have previously passed this process. This principle is also enshrined in the legal framework of the EU.

Sooner or later, Bulgaria should have joined the EU Banking Union, because participation in it is mandatory for the member states of the Eurozone. Bearing in mind that the stability of the banking sector is inextricably linked to the stability of monetary and fiscal policy, the earlier participation in the EU Banking Union, in parallel with the accession to ERM II, can only contribute to the purposes of this mechanism and to the implementation of the A smoother convergence with the Eurozone. Croatia was given the same requirement to join ERM II and the EU Banking Union at the same time. It should be recalled that in previous accessions to the Eurozone, the banking union was not yet established or its construction was only in its initial phase.

for the other preliminary and ex-post commitments from Bulgaria in connection with ERM II, concerning the improvement of the oversight of the non-banking financial sector, anti-money laundering and terrorist financing, management of state-owned enterprises and reforming the framework for bankruptcy, similar conclusions can be drawn. These structural reforms are necessary not only because of the preparation for membership in the Eurozone, but also because of the overall economic and social development of the country.

Last but not least, countries such as Estonia and other countries that are relatively recently joining the euro area also accept and respect commitments on the way to adopting the euro, in addition to the convergent criteria. For this reason, it cannot be argued that Bulgaria is treated unequally or additional commitments are imposed on it in connection with its preparation for joining the Single European Currency Area. 

• The myth that the currency board can be applied indefinitely

Myth: Since the currency board has been successfully applied for over 25 years in Bulgaria, it is a much better and safer regime than joining the Eurozone.

reality: The currency board in Bulgaria is a very good regime, which is of key importance for the stabilization of the country’s economy and finances for the last more than two decades. This is not only because of the design of the currency board, but also because of the consistent policies over the years of the central bank and governments to maintain price stability, strict fiscal discipline and the stimulation of macroeconomic balance.

For Bulgaria, the best way out of leaving the currency board is precisely the accession to the Eurozone, and with the same rate with which the Bulgarian lev is currently fixed to the single European currency. The stability of the currency board, apart from national policies, over the past two decades has been due, first, to the prospect of EU membership, and now to the prospect of exiting the currency board at the same time as the single currency is adopted.[12]

It should not be forgotten that the currency board, as a rule, is a temporary regime that fixes by law a highly variable price, namely the exchange rate of the national currency.  A few decades ago, the currency board was introduced into the world mainly as a post-colonial regime, mostly by former British colonies. Recently, the application of such currency regimes has been renaissance, and they usually aim to stabilize the national economy and markets after a severe crisis, which was available in Bulgaria in the period 1996-1997. 

1. The myth that EU institutions will let Bulgarian banks go bankrupt

MYTH: In case of a problem with Bulgarian banks, the ECB or the Single Resolution Board will not provide due diligence to save them because their size is too insignificant for the euro area banking sector.  

reality: There is neither rules nor logic for the ECB to properly supervise some banks and not to impose the same preventive supervision on others. As with the first more serious problem, to adopt a decision on their bankruptcy without the necessary recovery policy. For the same reason, there is no logic within the framework of Bulgaria’s participation in the EU Banking Union for the Resolution of the Unified Restructuring Council, while at the same time restructuring the other banks from the Eurozone if necessary.

In addition, Bulgarian representatives participate in making common decisions within the framework of the banking union. Bulgaria currently has a representative on the Supervisory Board of the ECB. After joining the Eurozone, Bulgaria will also have a representative on the ECB’s Governing Council. Already with the accession to the Banking Union, Bulgaria has a representative in the Unified Restructuring Council. These representatives are involved in the decision-making process with the right to vote.

1. The myth that foreign banks will be saved with Bulgarian funds

Myth: If Bulgaria enters the Eurozone, foreign “stuck” banks will be saved with the funds from the Bulgarian banking sector.   

reality: At first reading, this myth is completely real. In the event of a restructuring of a problematic credit institution from the EU Banking Union, the Single Resolution Board may allocate funds from the Single Resolution Fund, which have also been raised by Bulgarian banks.

What is being kept silent is that the need for restructuring or bailing may be required including a Bulgarian banking institution. In the same way, the representatives of other member states can express dissatisfaction with Bulgaria’s accession to the EU Banking Union with an argument for reluctance to restructure and save Bulgarian banks. Such reflections contradict the very spirit of the European idea, based on solidarity.

1. The myth that foreign banks will withdraw their capital from Bulgaria

Myth: Since the decisions are no longer independently made by the BNB, banks with foreign property in Bulgaria will restructure their subsidiaries into branches and thus more easily withdraw their capital from the country.    

reality: There is indeed a difference between a subsidiary bank of a foreign bank that is an independent legal entity and, on the other hand, a branch of a bank for which the foreign parent bank can make decisions much more independently and, accordingly, transfer and withdraw capital if necessary.

This is also one of the most groundless myths. The reasons and arguments for this are many, such as:

• Similar processes have not been observed in any of the countries of Central and Eastern Europe that join the Eurozone and the EU Banking Union, despite the fact that the banking sector is dominated by foreign banks, mainly by the Eurozone.
• Large banking groups prefer to store their capital in the countries of the Central and Eastern Europe region in subsidiaries rather than through branches. Thus, in the event of a need to restructure the business or the sale of its part of the CEE region, this can be done more easily, including because it is in the form of an independent legal entity.
• Banks in Bulgaria, which are subsidiaries of large foreign banks, generally make up a small share of their capital. In this way, even if all the capital from Bulgaria is withdrawn at once, it will not help to capitalize the bank’s business in its other markets.
• If the business in Bulgaria is working and profitable, no bank will withdraw it to finance a losing business in another part of the Eurozone. This completely contradicts market logic.
• Without reason, capital withdrawal from Bulgaria will pose a reputational risk to the EU banking institution. And the reputation of the banks can easily be violated, but it is very difficult to restore it. Therefore, they make serious efforts to maintain it.
• The representatives of the Bulgarian banking sector also do not share similar myths and concerns.[13]

1. The myth of joining the crumbling currency zone

Myth: Unlike a stable currency board, the eurozone is very likely to break up very soon, which is why it is very dangerous. 

reality: Many economists predict a rapid collapse of the Eurozone even before its creation. In the 1990s, when the establishment of the Eurozone was being prepared, a number of analysts indicated that the single European currency would never be introduced and replace the German mark and the French franc. There are no exceptions and research on how the euro threatens Europe’s future.[14] In practice, the exact opposite happens – the euro not only turns more than two decades, but has already established itself as the second most important currency in the world.

All this does not mean that there are no risks to the stability of the Eurozone, but behind its construction and functioning is an important political resource and support at the EU level. They are largely a guarantor of its stability and the duration of this project.

Another important argument is that Bulgaria is so integrated not only to the EU, but also to the Eurozone, that a collapse of it will have a strong negative impact on the country, regardless of whether it is part or not yet joined to it.

1. The myth that now is not the time to join the Eurozone

Myth: Now is not a good time to join the Eurozone and better times should be waited. 

reality: There are no appropriate and inappropriate times defined in EU law. On the contrary, when the Eurozone was created, many predict that most of the half of the member states of the then EU are not ready for it. The reality showed that eleven out of fifteen Member States successfully launched the single European currency project in early 1999. Its first expansion occurred just two years later in 2001. 

Malta and Cyprus, and then Slovakia, joined the eurozone in 2008 and 2009, respectively, when the global economic and financial crisis was still in full swing. Estonia became part of the eurozone in 2011, when the effects of this crisis are still strongly felt. The remaining expansions of the eurozone are also not realized in times cloudless for the Eurozone or for a country joining it.

Indicative that this myth is not real is also the moment when Bulgaria and Croatia become part of ERM II and the banking union of the EU. This is happening in the midst of the COVID-19 crisis. There are quite a few votes in Bulgaria that such accession is not suitable in the conditions of a health crisis. In practice, the pandemic did not prevent the positive decision for Bulgaria to participate in ERM II, postponed more than thirteen years before. 

1. The myth that we don’t need to go where others don’t want to

Myth: Poland, the Czech Republic, Hungary, Sweden and Denmark rightly do not want to join the Eurozone. Why should Bulgaria do it then?

reality: This is also one of the most wrong myths. When a half-truth is exaggerated, it can easily evoke trust in society. Especially in a situation where there is a certain Euroscepticism. It is true that in these five EU member states, Euroscepticism prevails at this stage regarding the adoption of the single European currency, but the supporters of this thesis in Bulgaria are silent on many other facts:

• While five out of twenty-seven member states are currently highly skeptical of adopting the euro, twenty are already part of the single European currency area. That is, the ratio is much stronger in favor of the countries that have introduced the euro.
• Not only Bulgaria, but also Croatia takes the road to ERM II and the Eurozone. Croatia last became part of the EU on July 1, 2013. In addition, Croatia joined the Eurozone on January 1, 2023 and became its twentieth member.
• Romania is also keen to join ERM II and the Eurozone more recently. But due to political and economic instability, as well as failure to meet a number of convergent criteria, it is still not ready to take the first formal step of this process, namely participation in ERM II.
• For many years, governments in Poland and Hungary have been ruled by relatively Eurosceptic parties. The policy of the Czech Republic has also often leaned in a similar direction in recent years. This also fuels Euroscepticism in them regarding the euro.
• The heterogeneous nature of EU member states outside the euro area, as well as the lack of already in this group of the United Kingdom, which was the undisputed leader in it, means that these countries have less and less weight in decision-making in the EU. In this way, it will be more difficult for Bulgaria to protect its interests outside than in the Eurozone.
• Four of the five cited countries have not tied their national currency to the euro.[15] In contrast, Bulgaria has fixed the Bulgarian lev to the euro for more than two decades. These four countries benefit from a more flexible exchange rate against the single currency, while Bulgaria has long given up on such flexibility.[16]

1. The Myth of Losing Sovereignty

Myth:  When Bulgaria joins the Eurozone, it will lose its sovereignty even more.

reality: With the application of the currency board regime with a fixed exchange rate to the euro, Bulgaria is largely already losing its sovereignty in the monetary area. At the same time, before joining the Eurozone, it cannot participate in decision-making because it does not have a representative in the ECB’s Governing Council. After the adoption of the euro, this fact changes. In this way, if we link sovereignty to decision-making, the reality may turn out to be the opposite – with joining the Eurozone, Bulgaria increases its opportunity to participate in making common decisions and protect its interests within the framework of the ECB’s Management Board.

In the conditions of globalization and integration of the financial, commercial, debt and currency markets, sovereignty in the monetary and currency area, especially for smaller countries and currencies, has an increasingly weak role. On the contrary, the participation in the currency zone of the second most important currency in the world is associated with much more influence in the global economy than owning the national currency of a small economy. Operating the euro as a legal tender in the country will be associated with much greater independence and influence. 

Finally, when Bulgaria had the opportunity in its history voluntary to join a currency zone or union that operates with the world’s second-strongest currency? which is generally accepted and in demand on all continents and markets of the world. We have never had such a unique chance before.

In this sense, myth is completely opposite to reality. The adoption of the euro does not reduce the country’s sovereignty, and its influence on currency, financial and other global markets is increasing.

1. The myth that people in Bulgaria do not trust the euro

Myth:  People in Bulgaria do not trust the euro. 

reality: This is also one of the most widespread myths, which when analysed the data turns out to be insufficiently justified. We will point out only some of the most important facts that refute this claim.

• When asked whether the introduction of the euro will have positive or negative consequences, in May 2021 46% of the respondents from Bulgaria answered that the introduction of the euro will have positive consequences for them personally, and 42% that it will have negative ones. In the last year, there has been an increase in the proportion of those who believe that the positive consequences for them prevail.[17]
• The majority of foreign currency deposits and loans are in Euros, which is again a sign of trust in the single European currency. 
• More and more Bulgarians are using the euro for transactions in the country and the share of those who know its design is increasing.

1. The Myth of Loss of Identity

Myth: The Bulgarian lev is a symbol of identity and with its loss it is taken away from the Bulgarian identity.

reality: Yes, the Bulgarian lev is a symbol of identity. If there is a myth that is closest to reality, this is perhaps the most striking example of this.[18] But other facts should not be ignored. The euro replaces not only currencies with a recent twenty-year history (such as the Slovenian Tolar, the Slovak Krona, the Estonian Krona, the Latvian Lat, the Lithuanian Litas), but also the German Mark, the French Franc, the Dutch Guilder. The Italian lira and others that are global currencies of important importance not only for national identity, but also for global trade, financial and currency markets.

In this case, there is another phenomenon – the loss of national identity is replaced not only by a European identity, but also by a European affiliation. The adoption of the euro is a civilizational choice that, if successful, will have a positive impact for generations to come.

We must note one more fact about the loss of identity. While on euro banknotes the obverse and reverse side is the same for all member states of the Eurozone, for euro coins only one side is the same and the reverse side of these coins is “national”. It reflects certain national specifics. Proposals are made by the respective Member States of the Eurozone, and then the design decision is common, as these coins can be used throughout the eurozone. 

1. The Slight Euro Myth

Myth: A single European currency is a weak currency, which is why we should not commit to it

reality: This is one of the most interesting myths related to the euro and its adoption by Bulgaria. It is true that there are periods when the euro exchange rate against the US dollar falls, as happened in 2022. But these are normal processes in the world currency markets. Initially, immediately after its introduction in January 1999, the exchange rate of the euro again fell against the US dollar, but later rose, which was part of the cyclical processes of the foreign exchange markets.

Whether we can call the world’s second most powerful currency is a completely different question. And this is more of a rhetorical question.

• The myth that Bulgaria is not obliged to accept the euro

Myth: Bulgaria is not obliged to accept the euro as a means of payment in the country

reality: Inclusion in the Eurozone is not an option for the new EU member states, including and for Bulgaria, and an explicit commitment in their contracts for accession to the EU. The only more significant feature is that these contracts do not set a deadline in which the new EU countries should adopt the single European currency. Bulgaria also has a commitment to adopt the euro, and no express deadline has been specified.

• The myth that Bulgaria should hold a referendum on the adoption of the euro

MYTH: The adoption of the euro is important for Bulgarian citizens, and therefore its introduction should only be done after a referendum to approve the introduction of the single European currency

reality: This myth is again very close to reality. At least because it is an indisputable fact that the adoption of the euro will be important for every Bulgarian citizen. But its introduction should not take place after a referendum. Including the fact that a referendum cannot be held on issues on which there is already a contract signed and ratified by the National Assembly, such as the Treaty on the Accession of the Republic of Bulgaria to the European Union.

Conclusion

The myths regarding Bulgaria’s accession to the Eurozone are many and varied. They can only be refuted with clear and well-presented arguments. Myths are easily born, but very difficult to remove from people’s minds.      

Myths about the euro and Bulgaria’s accession usually use facts that are close to reality. Sometimes they rely on people’s fears, such as the myths of increasing inflation and lowering the standard of living. While the arguments for the reality behind these myths, although well scientifically based, are more difficult to perceive by people and they would have a harder time believing them.

The need to conduct an effective explanatory and communication campaign for the adoption of the euro comes to the fore. It must be able to well and reasonably present not only the benefits and costs of membership in the Eurozone, but also make a distinction between myth and reality in connection with the adoption of the single European currency.

Bibliography:

1. Law on the Bulgarian National Bank.
2. Law on the right to cut coins in the Principality of Bulgaria, approved by Decree No. 229 of Prince Alexander I, published in SG No. 49 of June 4, 1880.
3. Coordination Council for the preparation of the Republic of Bulgaria for membership in the Eurozone (2022), “National plan for the introduction of the euro in the Republic of Bulgaria”, available on the website of the Ministry of Finance: https://www.minfin.bg/bg/1570. 
4. Nenovski, N., K. Hristov and B. Petrov (2001), “Lev to Euro: What’s the best way? Scenarios for Bulgaria’s integration into the European Monetary Union”, European Institute, Sofia.
5. Nikolova, D., G. Angelov and K. Staykov (2018), “Bulgaria’s accession to the Eurozone – the economic view. Effects on the economy of joining ERM II and the Eurozone”, Institute for Market Economy, April 2018.
6. Working Group “Communications”, (2022), “Communication strategy for information and publicity of Bulgaria’s accession to the Eurozone”, available on the website of the Ministry of Finance: https://www.minfin.bg/bg/1570.
7. Simeonov, K. (2022), “Bulgaria’s Road to the Eurozone. 339-361.
8. Simeonov, K. (2007), “The road to the Eurozone – to float or not to sail“, Minerva Publishing House, Sofia.
9. Stiglitz, J. (2016), “The Euro. How a Common Currency Endangers the Future of Europe”, East-West Publishing House, Sofia, 2016.
10. Stoyanov, N. (2020), “10 duties on the euro”, in Capital, February 21-27, 2020, pp. 15-16.
11. European Commission (2021), “Flash Eurobarometer 492: Introduction of the Euro in the Member States that have not yet been added to the commons Currency”, Fieldwork – May 2021, Publication – July 2021.
12. International Monetary Fund (2019), “Annual Report on Exchange Arrangements and Exchange Restrictions 2018”, 16 April 2019, p. 57-64.
13. https://www.bnb.bg/statistics/index.htm – Statistics page of the Bulgarian National Bank. 
14. https://www.ecb.europa.eu/mopo/html/index.en.html – European Central Bank monetary policy page.

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[1] According to the online dictionary of the Bulgarian language, the word myth has two main meanings. The first is: an ancient tale of legendary heroes, of gods, of nature or of historical events and personalities, including Ancient Greek myths. This meaning is inapplicable to our analysis, at least because in this case we are not analyzing historical (past), but upcoming events. The second meaning of the word myth that is used figuratively is: Fiction, amazing incident, unreliable narrative. See: http://talkoven.onlinerechnik.com – Interpretive online dictionary of the Bulgarian language.

[2] For more information on Bulgaria’s communication campaign to adopt the euro, see: Working Group “Communications”, (2022), “Communication Strategy for Information and Publicity of Bulgaria’s Accession to the Eurozone”, available on the website of the Ministry of Finance: https://www.minfin.bg/bg/1570. 

[3] The European Central Bank defines price stability as an annual increase in the harmonized consumer price index (HICP) for the euro area, which is lower than 2% per year. The ECB strives to keep price levels lower than 2% in the medium term. For more information, see the following page on the monetary policy of the European Central Bank: https://www.ecb.europa.eu/mopo/html/index.en.html.

[4] See Article 2 of the Law on the Bulgarian National Bank (SG, No. 46 of 10.06.1997, with subsequent amendments and additions).

[5] For more information on the legal and administrative measures that are introduced in connection with the preparation for the adoption of the euro and the conversion from a national to a single European currency, see: Coordination Council for the preparation of the Republic of Bulgaria for membership in the Eurozone (2022), “National Plan for Introduction of the Euro in the Republic of Bulgaria, available on the website of the Ministry of Finance: https://www.minfin.bg/bg/1570.

[6] For more information, see: Nikolova, D., G. Angelov and K. Staykov (2018), “Bulgaria’s accession to the Eurozone – the economic view. Effects on the economy of joining ERM II and the Eurozone”, Institute for Market Economy, April 2018.

[7] An example of a successful campaign, albeit with a disintegration-related campaign, is that of supporters for the withdrawal of the United Kingdom from the EU (the so-called Brexit). They manage to reach more people with much more ordinary and understandable messages, thus in the referendum on 23 June 2016. Support for Brexit in the UK has collected nearly 52% of the votes, although Polls before the referendum usually show a slight preponderance of supporters of the UK’s remaining in the EU.

[8] See: Nikolova, D., G. Angelov and K. Staykov (2018), “Bulgaria’s accession to the Eurozone – the economic view. Effects on the economy of joining ERM II and the Eurozone”, Institute for Market Economy, April 2018, pp. 14-16.

[9] On the topic of the myth of the loosening of fiscal discipline, see again the study of: Nikolova, D., G. Angelov and K. Staykov (2018). The same study also states that for two decades (1997-2016) Bulgaria registered the most significant decrease in its state debt of all EU member states, while Greece is on the reverse side of the scale with the most significant increase in its debt. This once again shows that an automatic comparison between Bulgaria and Greece should not be made, as well as conclusions should be drawn about the future policies in Bulgaria from the experience of other EU member states.

[10] For more information, see the BNB statistics page: https://www.bnb.bg/statistics/index.htm and in particular the data on the balance sheet of the Issue Management to the Central Bank.

[11] See: Nikolova, D., G. Angelov and K. Staykov (2018), pp. 19-20, as well as Stoyanov, N. (2020), “10 duties on the euro”, Capital, February 21-27 2020, p. 16.

[12] For the possible scenarios for exiting the currency board, respectively for the adoption of the euro by Bulgaria, see: Simeonov, K. (2007), “The road to the Eurozone – to float or not to sail“, Minerva Publishing House, Sofia, as well as: Nenovski, N., K. Hristov and B. Petrov (2001), “Lev to Euro: What’s the best way? Scenarios for Bulgaria’s integration into the European Monetary Union”, European Institute, Sofia.

[13] The myth that the EU institutions will let the Bulgarian banks go bankrupt; The myth that foreign banks will be saved with Bulgarian funds; As well as the myth that foreign banks will withdraw their capital from Bulgaria, are developed in the following source: Stoyanov, N. (2020), “10 customs duties on the euro”, v-k Capital, February 21-27, 2020, p. 15-16.

[14] See for example Stiglitz, J. (2016), “The Euro. How a Common Currency Endangers the Future of Europe”, East-West Publishing House, Sofia, 2016.

[15] According to the de-facto classification of the exchange rate regimes of the International Monetary Fund, the Czech Republic and Hungary have managed sailing of the national currency, and Poland and Sweden apply the most extreme form of flexibility to their exchange rate – independent sailing. See: International Monetary Fund (2019), “Annual Report on Exchange Arrangements and Exchange Restrictions 2018”, 16 April 2019, p. 57-64. Only Denmark has fixed the exchange rate of the Danish kroner to the euro in ERM II in an interval of plus minus 2.25%, but it also has an opt-out clause regarding joining the Eurozone, i.e. It is the only one of the current EU member states that is not obliged to adopt the euro.

[16] The myth that now is not the time to join the Eurozone and the myth that we don’t need to go where others don’t want to are also from the following source: Stoyanov, N. (2020), “10 customs on the euro”, Capital, February 21-27 2020, pp. 15-16.

[17] See: European Commission (2021), “Flash Eurobarometer 492: Introduction of the Euro in the Member States That Have Not Yet Adopted The Common Currency”, Fieldwork – May 2021, Publication – July 2021. 

[18] June 4, 2020 will be 140 years since the establishment of the Bulgarian Lev. It is a symbol not only of statehood, but also of liberation. The date of June 4, 1880 is considered the beginning of the history of the Bulgarian lev, when the law on the right to cut coins in the Principality of Bulgaria comes into force. See: Law on the right to cut coins in the Principality of Bulgaria, approved by Decree No. 229 of Prince Alexander I, published in SG No. 49 of June 4, 1880, available at the following email address: https://www.bnb.bg/bnbweb/groups/public/documents/bnb_pressrelease/pr_20200604_a1_bg.pdf.