Martin Bijsterbosch – Deputy Head of the Euro Area External Sector Department in the Directorate General for Economics of the European Central Bank with an exclusive interview for banker.bg – Part One
Martin Bijsterbosch is Deputy Head of the Euro Area External Sector Division in the Directorate General for Economics of the European Central Bank. He joined the ECB in 2001 and has held various positions in the Directorate General for Economics, the ECB Representation in Washington DC and the Directorate General for Macroprudential Policy & Financial Stability.
Mr Bijsterbosch became the ECB’s Coordinator (Head of Mission) for Greece in October 2020. He has extensive experience in country monitoring and crisis mission work and has been actively involved in addressing country-specific issues, including in several Central and Eastern European Member States of the European Union – Greece, Cyprus, Latvia and Portugal.
Mr Bijsterbosch has published articles on the role of credit in economic activity, the economic consequences of uncertainty and cross-border capital flows. Before joining the ECB, he worked at the Banque du Canada and De Nederlandsche Bank, where he started his career. Mr Biesterbosch has a Master’s degree in Monetary Policy Economics and studied at the Universities of Groningen and Siena.
What are the advantages and disadvantages of a small country like Bulgaria implementing an independent and autonomous monetary policy and vice versa – working according to the general policy of the ECB?
– The advantages of an independent monetary policy include the ability to tailor interest rates to a country’s specific economic conditions, such as targeting domestic inflation. Having a national currency also allows the exchange rate to react directly to national developments, helping to maintain international competitiveness or stabilise the economy following external shocks. However, in small, open economies with free capital flows, this flexibility is often limited in practice.
In 1997, following a period of a monetary policy strategy with a floating exchange rate, expansionary fiscal policy and an economic and banking crisis, Bulgaria adopted a fixed exchange rate through its currency board (initially linked to the German Mark, later to the euro). The currency board provided economic discipline, credibility and low inflation. With the adoption of the euro, Bulgaria will retain these benefits while gaining the advantages of using the world’s second-most important currency and having a voice in euro area monetary policy decision-making.
Will the BNB contribute more funds to the state budget after we enter the eurozone?
– Adopting the euro does not mean that the Bulgarian National Bank (BNB) will contribute more funds to the state budget. While the central bank can still transfer profits to the government, these transfers depend on BNB’s financial performance and are limited by restrictions on monetary financing, which are required to protect the ECB’s independence and its ability to maintain price stability. After covering operational costs and maintaining reserves, BNB may transfer part of its profits to the government, as it did before adopting the euro.
However, the amount depends on the financial results of the central bank, which are governed by Eurosystem rules. EU regulations and the Maastricht Treaty strictly prohibit central banks from directly financing government budgets, meaning the BNB cannot lend money to the government or buy government bonds in primary markets to cover budget deficits.
What are the advantages of membership in the eurozone for: small businesses; medium-sized businesses; large businesses; ordinary citizens?
– The advantages of the euro benefit businesses of all sizes and ordinary citizens by contributing to enhanced prosperity and security. Joining a large currency area will eliminate residual limited exchange rate uncertainty, reduce conversion costs, and simplify cross-border trade and foreign investment, all of which will eventually contribute to higher living standards. Euro adoption will also give Bulgaria access to deeper European capital markets, lowering borrowing costs and providing a solid foundation for long-term investment.
From a security standpoint, having the euro will protect Bulgaria from external economic shocks. As a small, open economy closely tied to European supply chains, Bulgaria will gain institutional credibility and stability from being part of a large monetary union—an essential advantage in today’s volatile global environment.
Small businesses will benefit from reduced costs and simplified cross-border trade, which are particularly valuable for firms with limited resources to handle administrative tasks. Medium-sized businesses are well-placed to also gain from improved financing opportunities and better market access, while large businesses can leverage economies of scale and enhanced global competitiveness. For citizens, the euro will make cross-border travel easier, with payments in the same currency as their income. Overall, the euro promotes integration, stability, and economic growth, making it advantageous for all groups.
How will our accession to the Euro area affect the fees and commissions of credit institutions in Bulgaria?
– Euro adoption can lead to lower fees and commissions for consumers and businesses, especially for cross-border payments and transactions within the euro area. At the same time, credit institutions face reduced revenue from currency-related operations, but benefit from streamlined processes that can lower their administrative costs. The overall impact on fees and commissions is hard to predict and will depend on factors such as the level of competition in the banking sector.
It is also important to note that the supervisory framework for Bulgarian banks will remain unchanged, as they have been under ECB banking supervision through close cooperation since the Bulgarian lev joined the Exchange Rate Mechanism II in July 2020.1 Overall, euro adoption is expected to contribute to a more integrated and efficient financial system in Bulgaria.
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1. Close cooperation in the context of the Banking Union is a framework where non-euro EU Member States participate in the Union’s supervisory mechanisms, allowing their banks to be overseen by the ECB while maintaining their own currency until they adopt the euro.
Източник: Banker.bg
