Nina Stoyanova: Bulgaria in the eurozone - what is next for the
business
Speech by Ms Nina Stoyanova, Deputy Governor of the Bulgarian National Bank, at the
opening of Capital and Economedia's 'Annual Fintech and Insurtech Summit' annual
conference, Sofia, 28 March 2023.
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I would like to thank the organisers from Capital newspaper and Economedia for the
opportunity to open today's conference. It is an important yearly event with an already
established good tradition, with the current edition dedicated to topical issues related to
the development of payments, the partnership between the Fintech sector and banks,
security of the financial services and data protection. These areas are continuously
developing, driven by the constant dynamics in technology and innovation.
The data we have at the BNB show that in the past year 2022 there was a growth by
about 1/4 in the number of non-cash customer payments made in the country compared
to 2021 and a growth by nearly 1/3 in the number of payments with cards issued in
Bulgaria. For another year, there has been an increase in the main segments of
payment services, and especially in services performed electronically, which testifies to
the positive and dynamic development of the payment market in our country. All
payment services, accessible and developed in the European Union (EU), are also
available and developed in Bulgaria while applying common technical standards and
regulations.
An additional incentive for the development of payment services and systems in our
country was given by the National Euro Changeover Plan, and work in this area
continues at the same pace this year as well. In the area of payment and settlement
systems, all projects related to the euro area accession will be completed by the end of
2023.
First of all, I would like to point out the successful migration on 20 March 2023 to the
new platform for TARGET services, carried out by the Bulgarian National Bank, the
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banking community and the operators of ancillary systems in the country , settling in
euro, together with participants from the euro area and the EU. The successful
migration is the result of 5 years of serious and thorough preparation on the side of the
European Central Bank (ECB) and the platform participants, coordinated in the country
by the Payment Systems and Minimum Required Reserves Directorate at the BNB as
the operator of the national bureau for TARGET services. The new platform unites at a
technical and functional level the T2 euro gross settlement payment system, the
TARGET2-Securities settlement platform and the TIPS euro instant transfer processing
service. From 2024, the new Eurosystem's collateral management system will be added
to the platform. The implementation of this large-scale project will contribute to the
integration and harmonisation of financial markets in Europe.
In July 2023, it is planned to complete the migration of budget payments to the
standards of the Single Euro Payments Area (SEPA), as a result of the activity of the
interagency working group set up for the purpose. It has been defined the structure of
budget payments in ISO 20022 format, as well as the necessary technical changes in
the form and content of financial messages in accordance with SEPA standards. An
overall easing of the process of bank servicing of the budget and optimisation of the
budget funds centralisation is expected, including by switching to processing customer
payments without a value limit through the BISERA6 payment system. The changes are
also aimed at aligning the requirements for the processing and settlement of payments
in BGN with those for the execution of SEPA payments in euro, for which no limit is
envisaged for euro payments processed by ancillary systems.
As a result of the implementation of the project, it is envisaged that from July 2023 all
credit transfers in the country, including those in the public sector, will be carried out in
accordance with the requirements of the SEPA credit transfer schemes of the European
Payments Council. In this way, a comprehensive change in the payment infrastructure
aimed at its full alignment with SEPA standards will be completed. This process started
in 2021-2022, when instant payments in BGN (executed within 10 seconds, 365 days a
year, 24 hours a day) and batch customer credit transfers in BGN (executed with an
effect close to instant - from a few minutes to an hour) were introduced.
Instant and batch credit transfers are executed on the basis of a new prefunded
settlement model introduced for the first time in our country, in which continuous
settlement is carried out throughout the day. It is important to note that at the moment
nearly 90% of all customer accounts in Bulgaria are already reachable for instant
payments in BGN. The implementation of batch credit transfers in the public sector is
planned to begin in the second half of 2023, which will lead to much faster processing
and availability of transferred funds that will be received within a few minutes to an hour.
The Bulgarian National Bank, BORICA AD and the banking community are in the
process of implementing a project that will ensure full reachability for credit transfers in
euro to over 4,800 payment service providers in all countries of the SEPA area. Banks
will be able to perform SEPA payments in euro using a prepaid model with continuous
settlement, similar to the one currently used for batch and instant payments in BGN,
which will significantly shorten the time for making transfers in euro. The project for full
SEPA reachability of credit transfers executed in euro is expected to be completed by
the end of 2023.
The successful cooperation between the BNB, BORICA AD and the banks in our
country is expected to yield results by the end of 2023 with the implementation of
another important project - to connect the BISERA7-EUR payment system operated by
BORICA AD to TIPS. TIPS is the Eurosystem's service for the settlement of instant
transfers in euro. TIPS provides full reachability for the execution of instant transfers in
euro (SCT Instant) to all payment service providers in the EU that process such
transfers.
Once this project is completed, the participants will be able to make national and
crossborder instant euro payments to all banks and non-bank payment service providers,
following the above described prefunded settlement model. The project for joining TIPS
is a logical continuation of the introduction of BGN instant payments in alignment with
the SEPA instant credit transfer scheme. Furthermore, this project will ensure the
infrastructural preparedness in the context of the expected amendments to Regulation
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260/2012 on SEPA , according to which all payment service providers executing
clients' credit transfers in euro will have to be able to perform instant credit transfers in
euro too.
The Bulgarian National Bank and the securities depositories in Bulgaria - the
Government Securities Depository at the BNB and Central Depository AD, in constant
communication and cooperation with the ECB, are working, according to the
predefined timetable, to join the securities settlement platform TARGET2-Securities (T2S),
which now has connections to 19 securities depositories from European countries.
TARGET2-Securities is part of the Eurosystem's new consolidated platform for
TARGET services that, as I already mentioned, went live successfully on 20 March
2023.
With the expected accession to T2S, the two Bulgarian depositories will be offering their
participants settlement of securities and funds in euro, in central bank money, on a
'delivery versus payment' principle. The benefits for issuers of, and investors in,
securities are related to ensuring cross-border settlement, diversified portfolios of
investments, and a more diverse investors' base. The Bulgarian depositories are
expected to join T2S, together with a few other securities depositories from the
European Union (EU), within this year's migration window planned in line with the
system's schedule for the middle of September 2023. The Bulgarian depositories have
already begun testing with the T2S platform, and the tests with their participants are
envisaged for the second quarter of this year.
In the area of statistics, by the end of 2023 the BNB is going to bring to completion its
work on joining the AnaCredit register and the Register of Institutions and Affiliates Data
(RIAD) of the European System of Central Banks (ESCB). This project will achieve full
compliance with Regulation (EU) 2016/867 of the European Central Bank of 18 May
2016 on the collection of granular credit and credit risk data, and Guideline (EU) 2018
/876 on the Eurosystem's Register of Institutions and Affiliates Data.
AnaCredit is a harmonised dataset containing analytical data on bank loans, which, on
a macro level, will foster the improvement of the existing statistics and the compilation
of additional information as the data will deliver essential breakdowns and details which
cannot be obtained from the current sources of information. RIAD is the ESCB's shared
dataset of reference data on the individual entities and the relationships between them,
and the two systems are interlinked.
In order to accomplish these objectives, the BNB is building a new integrated
information system which will allow compilation of all the information on loans and credit
risk through a single entry point, via one platform. The Central Credit Register will also
be integrated into the new platform. The platform may be used not only for statistical
needs, but also for the purposes of banking supervision, resolution of credit institutions,
and economic analysis.
Reporting entities will submit information to one system, by common standards for
Bulgaria and the EU, which will enhance the quality and consistency of the gathered
information and will minimise the reporting burden on reporting entities.
As I already said, the expectations are that all the above mentioned projects will be
finalised by the end of 2023, and thereby the payment and statistical systems in the
country will be integrated into the relevant systems and infrastructures of the euro area.
All of the described projects are essential for the financial infrastructure in the country
and will truly support further development of the innovations in this sector, following the
trends and standards in the SEPA area. Working simultaneously on a multitude of
complex projects is possible thanks to the successful cooperation, smooth
communication, and strong motivation and assistance demonstrated by all market
participants.
I wish interesting and fruitful work to all the participants in today's conference.
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The euro retail payments system BISERA7-EUR and the securities settlement
systems operated by the Government Securities Depository at the BNB and Central
Depository AD
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Regulation (EU) No 260/2012 of the European Parliament and of the Council of
14 March 2012 establishing technical and business requirements for credit transfers
and direct debits in euro and amending Regulation (EC) No 924/2009