Lane highlights euro area benefits and Bulgaria's policy tasks
ECB Executive Board Member Philip R Lane congratulated Bulgaria on its euro area entry, noting a smooth cash changeover and minor impact on prices. He outlined common policy challenges for the euro area and specific national tasks for Bulgaria.
The power of a common currency and shared challenges
Philip R Lane outlined common policy challenges for the euro area, including geopolitical shifts, digitalisation, artificial intelligence, demography, and environmental sustainability.
He stressed that a common monetary policy is the most effective response to external risks and common shocks.
Lane highlighted the increasing importance of scale in monetary systems, noting that a larger system provides insulation against exchange rate shifts and enhances financial market efficiency and liquidity.
This scale also enables advanced market infrastructure projects like the digital euro.
These benefits are reinforced by the ECB's capacity to provide swap and repo lines, strengthening global trust in the euro.
The euro area's financial architecture has become significantly more resilient due to post-2008 reforms, such as increased banking system capitalization, the Single Supervisory Mechanism, macroprudential measures, and the ECB's expanded policy toolkit, including the Transmission Protection Instrument.
Bulgaria's path to sustainable convergence
Lane addressed Bulgaria's national policy challenges, emphasizing the need to improve institutional quality and governance for economic resilience, as noted in the ECB's 2025 Convergence Report.
He anticipates Bulgaria's economy will grow faster than the euro area average, leading to somewhat higher inflation and wage growth due to the Balassa-Samuelson mechanism.
Lane stressed the importance of monitoring these dynamics to prevent overshooting and welcomed the Bulgarian National Bank's macroprudential policy framework, which includes borrower-based mortgage restrictions and a countercyclical capital buffer.
For fiscal policy, Bulgaria should enhance capital spending quality and combat the informal economy to improve tax collection.
Source: Philip R Lane: Bulgaria and the euro
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