Key Points

• Bulgaria is set to become the 21st member of the euro zone.

• The eastern European country last week received the sign off to join the bloc from the European Commission and European Central Bank.

• Economists and experts weighed in on the potential risks, outlining what Bulgaria could lose and gain from the move.

A person beats a drum with the euro logo crossed out in red on the drumhead during a demonstration against Bulgaria entering the Eurozone in Sofia on May 31, 2025.

Nikolay Doychinov | Afp | Getty Images

Bulgaria is poised to become the 21st member of the euro zone following approval from the European Commission and European Central Bank last week. However, not everyone is convinced that this is a positive step.

Bulgaria’s Prime Minister Rosen Zhelyazkov, affiliated with the center-right GERB party, has prioritized joining the euro zone, asserting that it would enhance economic stability and foster growth.

Despite this, concerns over rising prices and a perceived loss of sovereignty have ignited nationalist-party led protests against the country’s adoption of the euro. A recent European Union survey indicated that half of Bulgaria’s citizens oppose adopting the euro.

Economists and experts have discussed the potential risks of Bulgaria joining the euro, detailing what the eastern European nation might both gain and lose from this transition.

Inflation and interest rates

“The primary concern is a potential surge in prices during the currency transition, as some businesses might round up prices. Many Bulgarians fear that eurozone membership could undermine their purchasing power, particularly in less affluent rural areas,” Valentin Tataru, an economist at ING covering Bulgaria, explained to CNBC.

Nonetheless, he also pointed out that Bulgaria’s currency has long been pegged to the euro, and as such, “the transition-related inflation spike should be moderate.”

The euro zone is ready for a new member: Bulgaria

The second major concern is the impact of relinquishing Bulgaria’s currency, the lev, on the country’s independence and sovereignty — values that it has come to symbolize, according to Andrius Tursa, a central and eastern Europe advisor at Teneo.

“Switching to the euro may be perceived by segments of the population as a loss of national control,” he mentioned to CNBC. Additionally, there are worries about ceding control of monetary policy, as eurozone countries are subject to decisions made by the ECB, Tursa added.

The Bulgarian National Bank (BNB) would, for instance, no longer be solely responsible for setting the country’s interest rates based solely on its unique economic circumstances.

However, “eurozone countries enjoy lower interest rates due to the ECB's credibility and reduced currency risk,” Tursa highlighted. Lower interest rates usually benefit borrowers as loans and mortgages become more affordable.

Economic stability and power

Joining the euro zone and gaining ECB oversight could enhance economic stability and growth prospects for Bulgaria, Jasmin Groeschl, senior economist for Europe at Allianz SE, shared with CNBC.

She suggested that foreign investment might increase, and the country’s GDP is expected to be bolstered by euro zone membership.

“Deeper financial integration would fortify Bulgaria’s financial system under the ECB’s guidance, boosting monetary stability,” Groeschl elaborated. “Adopting the euro would solidify Bulgaria’s connections with the EU, enhancing its influence and credibility,” she added.

Key sectors underpinning the economy like trade and tourism could also receive support, according to Teneo’s Tursa.

A significant portion of Bulgaria’s key trading partners are in the EU, with the majority of its exports directed to the 27-state bloc in 2023 according to data from the country’s statistics office. Important sectors include machinery and transport equipment, manufactured goods, and food.

Tourism has also emerged as a major economic contributor, with Bulgaria promoting itself as a year-round destination. Over 13 million foreign visitors arrived in the country in 2024, official statistics revealed.

“Bulgaria’s entry into the eurozone would streamline trade and tourism with other eurozone countries by removing the costs and burdens of currency conversion,” Tursa noted, emphasizing that this is particularly crucial due to Bulgaria’s deep integration into EU supply chains.

Political tensions

One risk highlighted by economists and analysts is the political tension surrounding Bulgaria’s euro adoption.

“Public resistance to euro adoption has already sparked significant protests, and in the medium term, the issue could become a central factor in rising support for populist and Euroskeptic political movements,” Teneo’s Tursa explained.

Despite local protests and concerns over euro zone accession, at least in the long term, the benefits for the country outweigh any drawbacks, Allianz SE’s Groeschl argued.

“The trade-off involves sacrificing some economic autonomy in exchange for deeper integration,” she stated. “While Bulgaria would lose some control over monetary policy and be subject to strict fiscal rules, the advantages of greater economic stability, reduced transaction costs, and stronger integration with the EU market would typically outweigh these disadvantages.”

ING’s Tataru echoed a similar sentiment, noting that because the lev is already linked to the euro, there should not be a significant shock.

“Joining the euro is one of the most strategic steps Bulgaria can take to ensure long-term prosperity and deeper European integration,” he concluded.