Bulgaria Becomes 21st EU Member To Adopt Euro Despite Domestic Opposition

Bulgaria will officially adopt the euro, becoming the 21st member of the Eurozone on January 1 after meeting all the criteria required for joining the European Monetary Union.

"I warmly welcome the positive conclusions of the Convergence Reports published today by the European Commission and the European Central Bank," Eurogroup President Paschal Donohoe said. "These reports confirm that Bulgaria has now met all the necessary criteria for euro area membership — a pivotal milestone on its path to adopting the euro."

Despite public concerns about adopting the Euro, Bulgaria's economy is expected to benefit from the move. GDP growth will remain at a constant 2.8% in 2025, ING Think said on July 3. Wages are expected to continue finding support in the tight labour market, benefiting private consumption to some extent, it added.

"With the new fiscal stimulus in Germany underway, there are prospects of some tailwinds for the Bulgarian export-oriented industry in the medium term," ING Think said. "In the short run, however, some small palpable gains could be more visible from the Schengen ascension, the euro adoption and regional infrastructure developments more broadly"

Joining the Eurozone and securing oversight from the ECB could boost Bulgaria’s economic stability and growth prospects, Jasmin Groeschl, senior economist for Europe at Allianz SE, told CNBC. Foreign investment could, for example, increase, she suggested, and the country's gross domestic product would be expected to be boosted by Eurozone membership.

EU Introduces Euro to Create Stable, Integrated Monetary Union

The EU introduced the euro in 1999 as a virtual accounting currency by 11 EU countries and became a physical currency in 2002. The economic bloc sought to establish a stable and integrated monetary union that would facilitate cross-border trade.

Furthermore, the euro aimed to reduce currency exchange risks and give the EU a stronger voice on the global economic stage. The creation of the European Central Bank (ECB) established a stable monetary policy, interest rates, and financial stability within the European Union.

However, a blanket policy approach can be problematic in uncertain periods.

In a paper published last month, the Economic Governance and EMU Scrutiny Unit found that the ECB would benefit from enhancing transparency. The unit added that the ECB needed more clarity from its communication channels, particularly regarding the central bankers' speeches.

Seven EU Nations Opt Out of Euro

Despite the long-term goal of all EU member states adopting the euro, seven member states have not yet done so. They include Denmark (which secured an opt-out), Sweden, Poland, Hungary, Czechia, and Romania.

These countries either do not meet the necessary economic criteria or lack the political will to make the transition. Sweden, for example, voted against joining in a 2003 referendum and has no current target date for accession.

Meanwhile, Poland, one of the EU's best-performing economies in recent years, has elected historian Karol Nawrocki as the next president on June 1. He campaigned to keep the zloty as the country's official currency.

Bulgaria's Path to Euro Adoption

Bulgaria's case is unique because of its early commitment to euro alignment. The lev has been pegged to the euro since 1999—long before Bulgaria joined the EU in 2007—at a fixed rate of 1.95583 per €1.

This currency board arrangement essentially tied the country's monetary policy to that of the eurozone, limiting fluctuations and signaling commitment to fiscal discipline.

Economically, Bulgaria has maintained some of the lowest debt levels in the EU, currently standing at just 24.1% of GDP, well below the Maastricht Treaty's 60% threshold.

To adopt the euro, countries must fulfill four core criteria. These include stable prices, sound public finances (characterized by low deficits and debt), stable exchange rates, and converging long-term interest rates.

Bulgaria Brings Inflation Under Control

While inflation posed a challenge, recent figures confirm that Bulgaria has brought it under the required benchmark of 2.8%, satisfying the final condition for accession to the eurozone.

Theoretically, joining the euro offers many benefits. They include reduced currency exchange costs, lower interest rates, enhanced trade, greater investment confidence, and access to ECB mechanisms.

However, it also comes with risks as countries forfeit their independent monetary policy and lose currency flexibility. Eurozone countries must adhere to strict fiscal rules that can constrain government spending during economic downturns.

"Mixed opinions across society on the euro project do increase governance difficulties in the near term," ING Think said. "Our base case remains that the situation will remain manageable enough for the country to finalise its euro adoption and keep its fiscal stance in line with EU rules through the medium term."

Bulgaria Faces Local Backlash Over Euro Adoption

Despite the economic rationale, the adoption of the euro remains deeply controversial in Bulgaria.

A June 2025 Eurobarometer poll revealed a nation split: 50% oppose the move, while 43% support it. Protests erupted in Sofia and other cities as thousands demanded a national referendum to delay or block the transition.

Led by nationalist and pro-Russian factions, such as the Vazrazhdane party, demonstrators claimed that the euro poses a threat to Bulgaria's sovereignty.

"This is an anti-state coup, this is treason," party leader Kostadin Kostadinov said at a recent rally. He warned that Bulgaria would lose control over its budget and economic destiny to the ECB.

Misinformation Fuels Public's Euro Unease

Misinformation campaigns on social media have fueled public concern about the adoption of the euro. They have falsely asserted that the euro would lead to asset confiscation, forced digitization of currency, and increased poverty.

President Rumen Radev briefly endorsed the idea of a national referendum. Parliament ultimately rejected the proposal.

The symbolic "Town of the Lev" tent encampment in Sofia has become a focal point for ongoing opposition. Protestors maintained their presence even as parliamentary and EU-level votes confirmed the country’s entry into the eurozone.

Still, Bulgaria's government, backed by pro-EU coalitions, is expected to survive a no-confidence motion submitted by opposition parties.

Croatia's Example: ‘One Year with the Euro'

Croatia, the most recent entrant to the euro area, offers a relevant case study for Bulgaria.

Following the completion of the first year in the eurozone, in January 2024, National Bank Governor Boris Vujčić reflected on the developments in a speech titled "One Year with the Euro."

"If I were to sum up in one sentence what the euro has brought to Croatia," Vujčić said, "I would say it has brought all the benefits that we expected and announced, making the Croatian economy stronger and more resilient."

Vujčić noted how euro adoption helped eliminate currency risk. Before 2023, over 70% of Croatia's debt was in foreign currency. Today, that figure is under 1%. Lower interest rates followed.

Average housing loan rates dropped to 3.64%, which is below those in Germany (4.22%) and significantly lower than in Hungary (8.76%).

Croatia's National Bank Governor Addresses Inflation

Vujčić also addressed inflation fears.

"According to the CNB's analysis, the euro’s impact on prices was 0.4 percentage points. Eurostat's assessment was even lower—only 0.2 percentage points," he said. These mild price increases were within expectations and mirrored experiences in other euro-adopting countries.

He concluded that euro membership enhanced Croatia's credibility, credit ratings, and attractiveness to investors.

"This project was completed successfully in the shortest possible time, and the expected economic benefits of the transition to the euro were fully achieved."

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