Валутният борд – котва на стабилност за българската икономика
The Currency Board – an Anchor of Stability for the Bulgarian Economy

Summary/Abstract: The currency board was introduced in Bulgaria in 1997 in order to curb galloping inflation and stabilize the economy after the fierce banking crisis of 1996, a task it successfully completed. On the other hand, the board has been criticized on the grounds that it harms the real economy, which would otherwise grow faster under a flexible exchange rate regime. In any case, over the years it has functioned stably and successfully. Thus, the board survived during the global financial crisis of 2008/9, the banking panic in Bulgaria in 2014, as a result of which the fourth largest Corporate Commercial Bank went bankrupt, as well as the economic crisis caused by the KOVID pandemic. 19. If the board had collapsed under the pressure of these crises, it would have led to an economic catastrophe that would undoubtedly have had devastating social and economic consequences. Was such a catastrophic scenario possible? Worst case simulations show unequivocal resilience on board to the global financial crisis and banking panic of 2014 and the crisis caused by the KOVID pandemic. Reflecting these crisis phenomena, the indicators for the condition of the board report deterioration. However, they stabilize afterwards, leaving no cause for concern about the stability of the monetary system. The most logical end of the currency board arrangement would be the adoption of the euro at an exchange rate close to the current one, similar to the admission of Lithuania and Estonia to the Eurozone.

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