Nina Boteva Law Office

New Law on the Bulgarian National Bank

An entirely new Law on the Bulgarian National Bank (LBNB) was promulgated in the State Gazette on 13 February 2024. It aims to provide the legal framework for the integration of Bulgaria into the Eurosystem and the introduction of the euro as an official currency. The Law provides for an update of national legislation to meet European Union (EU) standards and to resolve inconsistencies identified in the convergence reports of the European Central Bank (ECB) and the European Commission. These reports are based on Article 140 of the Treaty on the Functioning of the EU and assess the economic approximation and compliance of Member States' laws with EU requirements.

In order to integrate the BNB into the Eurosystem, it is necessary to develop a new legal structure that is in full compliance with the Treaty on the Functioning of the EU and the Statute of the European System of Central Banks (ESCB) and the ECB. This includes ensuring that the BNB can carry out the tasks set by the Eurosystem and participate in the formulation and implementation of its monetary policy, including the use of all its instruments. Also, the powers that the ECB has over the BNB must be taken into account. This implies the creation of a new legal framework, which is different from the one established with the monetary board in 1997.

The New Law affirms two main principles that are fundamental for all national central banks (NCBs) within the ESCB – independence and accountability.

Art. 6 of the new LBNB emphasizes the institutional independence that is described in Article 130 of the EU Treaty and Article 7 of the Statute of the ESCB and the ECB, prohibiting NCBs and their governing bodies from seeking or receiving instructions from EU institutions or bodies, national governments of the member-states or other bodies. Also, these institutions and governments are prohibited from influencing NCB members who take decisions affecting ESCB-related tasks. In order for national legislation to comply with Article 130 of the Treaty and Article 7 of the Statute of the ESCB and the ECB, it must cover both prohibitions and not limit their application.

According to Article 7 of the new LBNB, the Bulgarian National Bank will report its activities to the Parliament, respecting the existing EU provisions set out in Article 284(3) of the TFEU and Article 15 of the Statute of the ESCB and the ECB. It is planned that the deadline for presenting the annual financial report of the BNB to the Parliament will be until 30 June of the following year. It should be recalled that until now this annual financial report of the BNB was presented until 30 April of the following year. In addition, it is planned that the BNB will twice a year report on its activities, in which it reviews and evaluates its activities in the previous period.

According to the plans the new legislative act, which regulates the activities of the Bulgarian National Bank, will enter into force at the moment when the Republic of Bulgaria officially adopts the euro as its currency. This moment will be determined by a special decision of the Council of the European Union, which will be taken on the basis of Article 140, paragraph 2 of the Treaty on the Functioning of the European Union. This decision will mark the beginning of a new stage in the country's economic integration with the rest of the Eurozone member states, placing the Bulgarian National Bank at the heart of the European financial system.

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