Euractiv: Bulgaria to Launch Joint Application to Euro Waiting Room and Banking Union

Bulgaria will seek to join both the eurozone's waiting room and the bloc's banking union within a year, Finance Minister Vladislav Goranov said on Tuesday (12 June).

Unlike bigger and richer EU countries that still use their own currency, such as Sweden and Poland, Bulgaria, the EU's poorest member, is eager to join the eurozone and wants to begin the two-year waiting period, by joining the EU's Exchange Rate Mechanism ERM2.

But the Commission wants Bulgaria first to join the Banking Union and the ERM2 only after. The Bulgarian position is that it should enter ERM2 first, and "the next day" the country would file an application for the Banking Union.

Now the compromise seems to be that Bulgaria will apply to ERM2 and to the Banking Union simultaneously.

Goranov has said earlier that one was not a precondition for the other.

The five official conditions for adopting the euro are the levels of public debt, inflation, budget deficits, interest rates and ERM2 membership. Bulgaria meets these conditions, and therefore its membership in ERM2 should be a formality. The problem for the country is that there are two unofficial conditions that will be hard to meet.

Through the Banking Union, the European Central Bank has the right to directly control the three largest banks in the country, but it can also check the smaller ones. The largest banks in the country are the Italian Unicredit Bulbank, DSK (owned by the Hungarian OTP) and Bulgarian FIBANK, which has had serious problems in recent years and had to be bailed out by the state.

According to Bloomberg, the ECB is not very enthusiastic about opening the doors to eurozone to Bulgaria only four years after the collapse of the Corporate Commercial Bank (CCB), the country's fourth...