The Law on the Introduction of the Euro in the Republic of Bulgaria was promulgated in the State Gazette, issue 70, dated 20.08.2024. The law establishes the rules and procedures for the transition to the euro and aims to guarantee consumer protection, transparency and efficiency in the process. In the following paragraphs, we will examine the main aspects of this law and its significance for Bulgaria.
Main goals and tasks of the law
The main objective of the law is to facilitate and complete the process of introducing the euro in Bulgaria, ensuring compliance with applicable European Union law. The law provides that the date of introduction of the euro will be determined by the Council of the European Union, once Bulgaria has fulfilled the necessary criteria for membership in the euro area. This emphasizes the strategic importance of this process for the integration of Bulgaria into the common European market and the financial system.
Rules and Principles for the Introduction of the Euro
The law introduces several key principles that must be observed during the transition to the euro:
- Principle of Consumer Protection:
One of the main concerns when introducing a new currency is the possible increase in prices. The law explicitly prohibits price increases, except when justified by objective economic factors. The conversion of prices and values from levs to euros cannot place consumers in a less favorable financial position. - Principle of information:
In order to avoid misunderstandings and distrust, consumers must receive clear, accurate and timely information about all aspects of the euro changeover process. This includes information about the rules for conversion, presentation of prices of goods and services in both currencies and the process of exchanging levs for euros. - Principle of efficiency and economy:
The introduction of the euro must be carried out in a manner that minimizes costs and efforts for the state and business. The law stipulates that the costs related to the transition will not be compensated with public funds, which underlines the need for effective management of the process. - Principle of transparency:
All activities related to the introduction of the euro must be carried out in a transparent manner. The institutions responsible for the process must provide publicly available information that is clear and understandable to all interested parties. - Principle of continuity and automatic conversion:
The law ensures that the introduction of the euro will not violate existing legal instruments and contracts, which will be automatically converted from levs into euros.
Price indication and dual circulation period
The law introduces the requirement to display prices in both levs and euros for a certain period of time. This is a key measure to protect consumers and avoid misleading practices. The period of dual display starts one month after the date of entry into force of the Decision on the adoption of the euro and lasts 12 months after the introduction of the euro as the official currency.
During this period, all traders are obliged to display prices in both levs and euros. This requirement aims to facilitate consumers’ adaptation to the new currency and to prevent possible abuses or misunderstandings. It is important to note that during the dual circulation period (one month after the introduction of the euro), the lev will remain legal tender alongside the euro. However, traders will have to give change only in euros.
Currency exchange and rounding
One of the key technical tasks in the introduction of the euro is the correct and fair currency exchange of all values from levs to euros. The law stipulates that currency exchange will be carried out on the basis of the fixed exchange rate, which is not subject to rounding or truncation. The rounding of the amounts received will be carried out according to clearly defined mathematical rules in order to avoid any controversial points.
Currency exchange covers not only the prices of goods and services, but also all financial instruments, including shares in companies, securities, deposits and loans. This ensures that there will be no legal inconsistencies or violations of existing contracts and agreements when switching to the new currency.
Exchange of levs to euros
The Bulgarian National Bank and banks will play a key role in the process of exchanging lev banknotes and coins for euros. During the first six months of the introduction of the euro, the exchange will be free of charge and without restrictions on quantity, which aims to ensure a smooth transition for all citizens and businesses. After this period, banks and Bulgarian Posts EAD will have the right to introduce fees for the service.
The law also provides for special rules for exchanging large amounts, which will require a prior request. This is a measure aimed at avoiding the accumulation of large amounts of currency in a short period of time.
Legal Aspects of Currency Conversion of Contracts and Instruments
The automatic currency conversion of contracts and legal instruments is another important aspect of the law. It ensures that all existing contracts that contain values in levs will be automatically converted into euros on the date of introduction of the new currency. This applies to all types of contracts, including employment contracts, loans, leases and other legal commitments.
Particular attention is paid to the currency conversion of the capital of commercial companies. The law provides that the nominal value of shares and the capital of companies will be converted according to the official exchange rate. The difference will be reflected as undistributed profit or uncovered loss from previous years. This ensures that there will be no loss or change in the shares of shareholders and partners.
Заключение
The Law on the Introduction of the Euro in the Republic of Bulgaria is a key stage in the country’s transition to the new currency. It offers detailed regulation of all aspects of the process, from consumer protection to the currency conversion of legal instruments and contracts. The introduction of the euro will be a complex and multi-layered process that requires careful planning and coordination between various institutions and organizations.
It is important that all stakeholders, including the state, business and citizens, are well informed and prepared for this transition. The law not only regulates the technical and legal aspects of the process, but also places emphasis on transparency.
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