Effects of 3 years of Bulgaria in the Banking Union

| Full text of the analysis |

At the beginning of October, it was three years since Bulgaria joined the Banking Union. The event was once advertised with great official enthusiasm. It was even explained that this marks the practical beginning of the country's membership in the eurozone. The argument – The Banking Union is a mechanism created in and for the eurozone, but unlike other formats and structures of the eurozone, it allows for the inclusion of EU countries that have not adopted the euro. Bulgaria and Croatia made such an inclusion in 2020.

The anniversary of the event in question has now passed unnoticed. There were no special interviews with ministers or BNB representatives, the leading media were silent. Was this due to competition from other hot news topics? Or has the desire to celebrate “historic” successes from the past, from which so much was expected but so little or nothing came true, already evaporated?

The present text, the full version of which you can read at this link, consists of five parts, addressing respectively: (1) a brief history and issues related to joining the Banking Union; (2) approaches and methods for reviewing and assessing the three-year participation in the Banking Union; (3) changes and effects related to the banking system; (4) changes and effects in macroeconomic terms; (5) forward-looking conclusions.

Here are the main conclusions of the analysis.

• Three years after the beginning of Bulgaria's membership in the Banking Union and participation in the ERM2 exchange rate mechanism, the expected benefits and effects are no longer being commented on.
• The controversial history of joining the Banking Union and criticism of the process gave way to official talk and stories about the political aspects and organizational changes mainly in banking supervision.
• This study presents a previously missing framework for reviewing and assessing changes during the three-year membership of the Banking Union, based on objective indicators (statistics). Two broad areas (banking sector and macroeconomics) are examined under 8 specific themes (competition, sustainability, profitability, lending rates, foreign investment, foreign trade balance, credit rating and GDP per capita) and a total of 12 groups of indicators. In addition to the banking and macroeconomic perspectives, a focus is placed on the perspective of citizens and businesses.
• The banking sector remains stable, with high capital adequacy and liquidity, and bank profitability and profits are growing. The latter, all other things being equal, is at the expense of bank customers.
• The key macroeconomic indicators examined do not show any significant improvement as a result of (or de facto after ) joining the Banking Union.
• The general assessment is that so far, participation in the Banking Union (and in the ERM2 exchange rate mechanism) has been, at best, irrelevant to citizens and companies in Bulgaria, but has definitely not benefited them.
• The approach of politicizing, ideologizing and non-transparently making "European integration" decisions (at the expense of objective, financially expert and democratic control and assessment) is traditional for the political class. A similar approach is being replicated in our country on the next big topic - the introduction of the euro.

| Full text of the analysis |

Did you like it? Take a minute to support the EKIP on Patreon!