A new law on the BNB prohibits any attempts to influence our central bankers by government, institutions, services
Members of political parties, deputies and municipal councilors and related persons cannot be employees of the central bank
The role of the manager – with new responsibilities
The control over our banks becomes dual – by the ECB and the BNB
From the date of our membership, the official currency and monetary unit is the euro, one euro is divided into one hundred cents
A new law for the BNB, as a first step towards the introduction of a completely different regime of monetary policy compared to the monetary board established in 1997, was announced for public discussion by the Ministry of Finance.
The document is part of the requirements of the European Commission and the ECB for our membership in the Eurozone, and the reason is that Bulgaria becomes a full participant in the single monetary policy.
The plan is for the new Law on the Bulgarian National Bank to enter into force on the day that the Council of the European Union will designate for the adoption of the euro by the Republic of Bulgaria and to repeal the Law on the Currency Board.
Two are the most important changes that will be introduced with it. The first is the principle of institutional independence. The management of our central bank will be expressly prohibited from seeking or accepting any instructions, either from EU institutions or bodies, or from any member state government or any other authority. Institutions, bodies or offices that try to influence those members of the NCB’s decision-making bodies will also be legally liable with corresponding penalties.
The central bank, for the decisions of which its governing bodies bear full responsibility, implies an account to the parliament. The law extends this deadline until June 30 of the following year.
The new law defines a new role for the governor of the central bank – he will lead the bank, participate in determining the monetary policy of the European Union and represent it both externally and before the national authorities.
The new law preserves the three main departments in the bank “Issue”, “Banking” and “Bank supervision”. “Issue” department will continue to manage the money circulation and the management of the reserve assets of the bank. However, the deputy governor of this department will not participate in the formulation of the ECB’s monetary policy – this important function is already entrusted to the governor of the BNB, insofar as he becomes a member of the ECB’s Executive Board.
The key Directorate “Banking Supervision” retains its function of supervising the banking system, supervising payment system operators, payment service providers and electronic money issuers, as well as providing emergency liquidity support to banks, which replaces the former function of lender of last resort.
However, a drastic tightening of the regime for classified information is foreseen with the new law, because the management of our central bank will now have access to all questions about euro banknotes and euro coins, including protection measures, order of provision, transportation is subject to regulation in the law of EU and cannot be considered as information of the BNB or the Republic of Bulgaria.
To ensure this, the law introduces strict requirements for the employees who will have access to this information: a person who is a national representative or a municipal councilor, holds a managerial or control position at the national level in a political party, a sole proprietor cannot be an employee of the BNB merchant, general partner in a commercial company, manager, commercial representative, commercial representative, procurator, commercial intermediary, liquidator or receiver, member of a management or control body of a commercial company or cooperative, as well as a person who is in a certain relationship with a supervised face.
The new law on the BNB regulates the status of the euro as a monetary unit, determining the design of the national side of exchangeable euro coins, issuing and withdrawing from circulation, exchange, exchange and reproduction of euro banknotes and euro coins. It states that from the date of our membership, the euro becomes the official currency. The monetary unit is one euro. One euro is divided into one hundred cents.
The law gives rights to our mint to issue euro coins in circulation (exchange), commemorative and collector euro coins of precious metals and copper. Collector euro coins remain legal tender only in Bulgaria. The national side’s decisions on the design of exchangeable and commemorative euro coins that it issues, as well as the design, face value and technical characteristics of collector euro coins, as well as the preservation and storage of uncirculated euro banknotes and coins, and the preservation and destruction of unfit or withdrawn from circulation of euro banknotes and euro coins.
The draft of a new Law on the BNB also regulates the management of reserve assets that are not related to the monetary policy of the Eurosystem, but the types of assets and instruments in which the reserves of the BNB can be invested are explicitly described. However, the requirements for them are increasing – they may not be those rated with the two highest ratings of two internationally recognized credit rating agencies, but with three such ratings.
The introduction of the euro as an official monetary unit will lead to changes in the collection, processing and distribution of official statistical information compiled by the BNB, which are detailed in the law. The Bulgarian National Bank continues to act as a fiscal agent and depository of the state based on concluded contracts and under market conditions and service prices.
The supervision of financial institutions does not change significantly because the BNB is already part of the Unified Supervisory Mechanism from October 1, 2020. consolidated supervision. However, it becomes consolidated – i.e. double – both from the ECB and from the BNB.