The Inevitable End of the Bulgarian Lev: Why Resistance to the Euro Is Futile

 

The Inevitable End of the Bulgarian Lev: Why Resistance to the Euro Is Futile

Business » FINANCE | June 5, 2025, Thursday // 09:01

https://www.novinite.com/articles/232688/The+Inevitable+End+of+the+Bulgarian+Lev%3A+Why+Resistance+to+the+Euro+Is+Futile

 

The Bulgarian Lev was introduced in 1879, originally pegged to the French Franc. From its inception, the Lev has been linked to foreign currencies. Over the 20th century, it followed several anchors: the French Franc until 1912, the gold standard between the World Wars (until Britain abandoned it in 1931, which led the Lev to float), the German Reichsmark during 1940-1944, and later the Soviet Ruble during the Comecon period. After 1989, the Lev was free but unstable until 1997, when it became firmly pegged to the euro - first indirectly via the German mark, then directly.

 

What happened when the Lev briefly “stood alone”? The 1930s brought hyperinflation, and from 1990 to 1997, inflation averaged over 200% annually, peaking at 579% in 1997. The currency has undergone three redenominations - in 1952, 1962, and most recently in 1999. Today’s Lev (BGN) is not the old Lev (BGL); it operates under a currency board system pegged to the euro.

 

Since 1997, Bulgaria has effectively lacked an independent monetary policy. The Lev is tied to the euro via a currency board, leaving the Bulgarian National Bank (BNB) without authority to set interest rates or steer monetary policy independently. Practically, Bulgaria operates with the euro already - just without a seat at the European Central Bank’s table.

 

For businesses and citizens, adopting the euro means cutting significant costs. Currency conversion, tax compliance, and exchange rate risks currently burden companies dealing with Europe. Switching to the euro could save firms between 1% and 3% of their turnover - a seemingly small percentage but translating into millions of leva annually.

 

Contrary to fears, prices won’t double with the euro. Experiences from Lithuania, Slovakia, and Croatia show minor, short-term price increases of 1-2% above average inflation, balanced by rising wages and investments. If salaries don’t grow, the problem lies in company policies, not the currency change.

 

National identity remains intact despite the euro. Countries like Italy, Spain, France, Greece, and Estonia all use the euro without losing their language, culture, or history. Identity depends on a nation’s pride, memory, and social progress, not the physical banknotes in circulation.

 

Since 1997, the “Bulgarian Lev” has been a quasi-euro currency. The old Lev ceased to exist after hyperinflation forced redenomination and the establishment of a currency board pegged to a Western currency. Bulgaria’s current Lev is, in essence, a fixed-rate currency tied to the euro.

 

The euro is no miracle cure but an opportunity. It offers access to a larger market, lower borrowing costs, investor confidence, and protection through the ECB. It’s a tool that, if used wisely, can benefit Bulgaria’s economy.

 

A key myth to dispel: the exchange rate will not change, and savings will remain safe. The official Lev-to-Euro rate of 1.95583 is fixed by the European Central Bank and the European Commission. Bulgaria cannot unilaterally alter it. The country’s entry into the eurozone will happen only after the European Council confirms this rate. History shows no last-minute exchange rate changes in other eurozone entrants like Croatia, Slovakia, or Lithuania.

 

All Lev funds will be converted automatically at the fixed rate without hidden fees or deductions. The BNB and Ministry of Finance have repeatedly assured the public: the exchange rate is stable as part of Bulgaria’s ERM II commitments - the eurozone “waiting room.”

 

Claims to the contrary are either misinformation or deliberate falsehoods. Fear of change is natural but fearing a currency already effectively in use is paradoxical. Bulgaria currently lives like a tenant in a foreign house without voting rights. Joining the eurozone means finally sitting at the table as an equal partner.

 

Short-term inflation rises caused by rounding, speculation, and uncertainty are expected but should settle within one to two years. The real benefits will then begin to appear.

 

The public should approach the transition critically - read, question, and avoid myths or sensationalism. This is not about being a Europhile, Russophile, or Russophobe. It is about being a Bulgarophile - seeking what is best for Bulgaria’s future.