Opinion of the European Central Bank of 18 September 2023 on the integration of Българска народна банка (Bulgarian National Bank) into the Eurosystem (CON/2023/27)
Date: 2023-09-18
Institutions: European Central Bank
Subjects: legal basis, money

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 18 September 2023  

on the integration of Българска народна банка (Bulgarian National Bank) into the Eurosystem 

(CON/2023/27) 

Introduction and legal basis 

On 28 August 2023 the European Central Bank (ECB) received a request from Българска народна банка 

(Bulgarian National Bank (BNB)), acting on behalf of the Bulgarian Minister for Finance, for an opinion on 

a draft law recasting and replacing the Law on BNB (hereinafter the ‘draft law’). 

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 

Functioning of the European Union and the third indent of Article 2(1) of Council Decision 98/415/EC 1, as 

the draft law relates to BNB. In accordance with the first sentence of Article 17.5 of the Rules of Procedure 

of the European Central Bank, the Governing Council has adopted this opinion. 

1.

Purpose of the draft

1.1  As explained in the consultation letter accompanying the draft law, the draft law aims to ensure the

legal integration of BNB into the Eurosystem upon the introduction of the euro in Bulgaria. The draft 

law adopts the approach of not reproducing in national law directly applicable provisions of Union 

law but, where appropriate, it includes references to such provisions.  

1.2  The draft law fully replaces and repeals the currently applicable Law on BNB. The draft law is divided 

into  16  chapters,  covering  (1)  general  provisions,  (2)  independence,  (3)  accountability,  (4)  core 

capital and reserves, (5) structure and governance, (6) currency, banknotes and coins, (7) monetary 

policy, (8) management of BNB reserve assets, (9) management of foreign assets, (10) relations with 

the  State,  (11)  relations  with  banks,  (12)  relations  with  other  persons,  (13)  statistical  activity, 

(14) financial  reporting  and  implementation  of  the  budget  of  BNB,  (15)  other  provisions,  and

(16) administrative criminal liability. The draft law also contains supplementary, transitional and final

provisions.

1.3  The draft law would enter into force on the date stipulated in the Council Decision on the adoption 

by the Republic of Bulgaria of the euro, adopted in accordance with Article 140(2) of the Treaty, and 

in the Council Regulation adopted in accordance with Article 140(3) of the Treaty. The regulations 

on the implementation of the repealed Law on BNB would remain in force insofar as they are not 

contrary to the draft law2. 

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2 

Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities 
regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 

See paragraphs 4 and 5 of the transitional and final provisions of the draft law. 

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2. 

General observations 

2.1  The ECB welcomes the draft law. The draft law’s objective is to facilitate a smooth changeover to 

the euro in Bulgaria and timely implementation of the necessary measures in connection therewith. 

2.2  The ECB welcomes the draft law’s objective to achieve the required level of legal convergence as 

set out in the recommendations for Bulgaria contained in the ECB Convergence Report 20223, which 

reports on the progress made by Member States with a derogation, including Bulgaria, in fulfilling 

their obligations regarding the achievement of economic and monetary union. Part of this reporting 

covers, inter alia, the compatibility of Bulgarian legislation, in particular, the Law on BNB and the Law 

on counter-corruption, with the Treaties and the Statute of the European System of Central Banks 

and of the European Central Bank (hereinafter the ‘Statute of the ESCB’), as required by Article 131 

of the Treaty. 

2.3  The ECB welcomes that the draft law seeks to avoid reproducing directly applicable provisions of 

Union law but that, where appropriate, it includes references to such provisions. In this respect, it 

should  be  noted  that  the  reproduction  in  a  national  provision  of  a  Union  provision  that  is  directly 

applicable in the legal order of the Member State may create uncertainty both as to the legal nature 

and origin of the applicable provisions and as to the date of their entry into force. This would not align 

with the principle of uniform application and interpretation of Union law throughout the Union4. 

2.4  Furthermore, given the hybrid status of the national central banks (NCBs) in the highly integrated 

structure which  the authors of the Treaties  envisaged for the  European  System of Central  Banks 

(ESCB) and the Eurosystem5, the reproduction in a national law of a provision of the Treaties and 

the Statute of the ESCB that is directly applicable in the legal order of the Member State may create 

uncertainty as to the acts over which the Union courts have jurisdiction or as to whether the NCB is 

accountable to its national parliament. This would not align with the singleness of monetary policy 6.  

2.5  Moreover,  if  a  national  provision  uses  wording  different  from  the  relevant  Union  provision  for  the 

introduction of the euro, it would create regulatory content of its own, which would not be in line with 

the  Union’s  exclusive  competence  in  matters  of  monetary  policy  for  the  Member  States  whose 

currency is the euro7. The concept of monetary policy is not limited to its operational implementation, 

which, under Article 127(2), first indent of the Treaty, is one of the basic tasks of the Eurosystem8, 

but also entails a regulatory dimension intended to guarantee the status of the euro as the single 

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5  

6  
7  
8  

See ECB Convergence Report 2022, available on the ECB’s website at www.ecb.europa.eu. 
Judgment of the Court of Justice of 2 February 1977, Amsterdam Bulb, C-50/76, EU:C:1977:13, paragraphs 5 to 8; 
Judgment of the Court of Justice of 10 October 1973, Variola, C-34/73, EU:C:1973:101, paragraphs 9 to 11; Judgment 
of the Court of Justice of 7 February 1973, Commission v Italy, C-39/72, EU:C:1973:13, paragraphs 16 and 17. See 
also  paragraph  2.3.  of  Opinion  CON/2022/15,  paragraph  2.2  of  Opinion  CON/2007/43,  paragraph  2.1  of  Opinion 
CON/2007/1, paragraph 2.4 of Opinion CON/2006/29, paragraph 2.1 of Opinion CON/2006/10 and paragraph 12 of 
Opinion CON/2005/21. All ECB Opinions are available on EUR-Lex. 
Judgment of the Court of Justice of 13 September 2022, Banka Slovenije, C-45/21, EU:C:2022:670, paragraph 52; 
316/19,  EU:C:2020:1030, 
Judgment  of  the  Court  of  Justice  of  17  December  2020,  Commission  v  Slovenia,  C
paragraph 83. 
Article 119(2) of the Treaty. 
Article 3(1), point (c), of the Treaty. 

‑

Article 139(2) of the Treaty. 

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currency9.  As  a  result,  Member  States  may  not  adopt  provisions  in  that  area  without  being 

empowered to do so by Union law10. 

2.6  Although the draft law generally does not reproduce directly applicable provisions of Union law, some 

provisions of the draft law incorporate some elements of directly applicable provisions of Union law 

into  Bulgarian  law  for  the  sake  of  coherence  and  in  order  to  make  them  comprehensible  to  the 

persons to whom they apply11. In this regard the ECB welcomes that the reproduction of elements 

of directly applicable provisions of Union law is done precisely in the draft law, either by incorporation 

or reference, without modifying their wording12. The draft law clarifies in particular that the relevant 

provisions are either ‘in accordance with’ or ‘in compliance with’ the relevant provisions of Union law, 

where the latter are merely reproduced or referenced to put the draft law in the larger context of the 

highly integrated structure BNB operates in, or ‘without prejudice to’ the relevant provisions of Union 

law, where BNB acts as a national authority, exercising residual competences 13 that go beyond those 

exercised within the ESCB and the Eurosystem.  

3. 

Specific observations 

3.1  Financial reporting 

3.1.1  Article 9(1) of the draft law provides that, in order to cover financial risks, BNB is to allocate provisions 

in an amount determined by the BNB Governing Council, which is to be an item of the accounting 

expenditure and an adjustment of the assets on the balance sheet. While the scope of Article 9(1) of 

the  draft  law  is  in  line  with  Article  8  of  Guideline  (EU)  2016/2249  of  the  European  Central  Bank 

(ECB/2016/34) 14,  the  reference  to  an  adjustment  of  the  assets  on  the  balance  sheet  could  be 

misunderstood  because  a  provision  is  generally  accepted  to  be  a  liability  of  uncertain  timing  or 

amount. The ECB, therefore, recommends that this part of Article 9(1) is replaced by a clarification 

that BNB allocates provisions, in an amount determined by the BNB Governing Council, that are an 

item of the accounting expenditure and take into account a number of factors, including the level of 

risk-bearing assets on the balance sheet. 

3.1.2  The first sentence of Article 57(1) of the draft law provides that any unrealised gains of BNB arising 

from variations in the valuation of BNB’s assets or liabilities in gold or expressed in gold terms, or in 

foreign currencies, as a result of a fluctuation of the price or of the rates of exchange of gold or of a 

foreign currency against the euro, is to be credited to a special reserve account. The ECB notes that 

whereas  Guideline  (EU)  2016/2249  (ECB/2016/34)  envisages  that  NCBs  also  revalue  their  euro-

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14  

Judgment of the Court of Justice of 26 January 2021, Hessischer Rundfunk, C-422/19 and C-423/19, EU:C:2021:63, 
paragraph 38 and 39. 

Judgment of the Court of Justice of 20 April 2023, Brink’s Lithuania, C-772/21, EU:C:2023:305, paragraphs 56 and 57. 
See paragraph 2.4 of Opinion CON/2022/15 and paragraph 12 of Opinion CON/2005/21 with reference to Judgment 
of  the  Court  of  Justice  of  28  March  1985,  Commission  v  Italian  Republic,  C-272/83,  EU:C:1985:147.  See  also 
paragraph 2.2 of Opinion CON/2006/10. 

See paragraph 2.4 of Opinion CON/2022/15 and paragraph 2.2 (footnote 6) of Opinion CON/2007/43. 
See Article 14.4 of the Statute of the ESCB. 
  Guideline (EU) 2016/2249 of the European Central Bank of 3 November 2016 on the legal framework for accounting 
and financial reporting in the European System of Central Banks (ECB/2016/34) (OJ L 347, 20.12.2016, p. 37).  

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denominated holdings of non-monetary policy related marketable securities, other than those held to 

maturity 15, Article 57(1) refers only to the valuation of assets or liabilities in gold or foreign currency.  

3.1.3  The second sentence of Article 57(1) of the draft law provides that in addition to the purposes referred 
to  in  Article  57(2)  of  the  draft  law,  whereby  losses  arising  from  the  variations  referred  to  in 

Article 57(1) must be offset by funds in the special reserve account, the amounts in this account may 

also be used to cover other losses of BNB. It is not clear whether these provisions are compliant with 

the  ‘no-netting’  principle  for  the  revaluation  of  gains  and  losses  as  defined  in  Guideline  (EU) 

2016/2249  (ECB/2016/34).  In  this  context,  Article 15(1),  point  (e),  of  Guideline  (EU)  2016/2249 

(ECB/2016/34) clarifies that there is to be no netting of unrealised losses in any one security, or in 

any currency or in gold holdings, against unrealised gains in other securities or currencies or gold.  

3.1.4  In order to achieve consistency with the ECB’s legal framework for accounting and financial reporting 

in the ESCB, the ECB suggests clarifying that the scope of Article 57 of the draft law is not limited to 

assets  and  liabilities  denominated  in  foreign  currencies,  but  also  includes  revaluations  of  euro 

denominated items as required under the ECB’s legal framework. Moreover, the ECB recommends 

that  the  last  sentence  of  Article 57(1)  and  the  entire  Article  57(2)  should  be  either  removed  or 

clarified.  

3.2  Currency, banknotes and coins 

3.2.1  Article 26(1) of the draft law provides that the currency of Bulgaria is to be the euro, that the currency 

unit  is  to  be  one  euro,  and  that  one  euro  is  to  be  divided  into  one  hundred  cent.  This  provision 

reproduces  Article  2  of  Council  Regulation  (EC)  No  974/9816,  as  a  consequence  of  which,  upon 

Bulgaria’s  adoption  of  the  euro,  with  effect  from  the  date  on  which  the  abrogation  of  Bulgaria’s 

derogation under Article 140(2), first subparagraph, of the Treaty enters into effect, the currency of 

Bulgaria will be the euro. Article 2 of Regulation (EC) No 974/98 constitutes a provision of directly 

applicable  Union  law  and  an  explicit  reference  should  be  made  to  it  if  its  partial  reproduction  is 
maintained in the draft law for the sake of coherence. 

3.2.2  Article 32(1) and (2) and Article 33(1) and (2) of the draft law concern, inter alia, the separation of 

euro banknotes and coins unfit for the cash cycle. These provisions partially reproduce Article 6(1) 

of Council Regulation (EC) No 1338/2001 17. The draft law should state that the obligations set out in 

these provisions of the draft law will be carried out in accordance with the applicable provisions of 

Union law, notably Decision ECB/2010/14 of the European Central Bank 18. 

3.2.3  Article 33(3) of the draft law empowers BNB to determine the requirements for the processing of euro 

banknotes  by  banks,  other  specified  financial  institutions  and  economic  operators.  This  provision 

partially reproduces Article 10 of Decision ECB/2010/14. The draft law should clarify that Article 33(3) 

15  

16  
17  

18  

In  addition,  Article  9(5)  of  Guideline  (EU)  2016/2249  (ECB/2016/34)  provides  that  marketable  securities  held  for 
monetary policy  purposes are to  be valued either at  market price  or amortised cost  depending  on  monetary  policy 
considerations. 
Council Regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro (OJ L 139, 11.5.1998, p. 1). 

Council Regulation (EC) No 1338/2001 of 28 June 2001 laying down measures necessary for the protection of the 
euro against counterfeiting (OJ L 181, 4.7.2001, p. 6). 
Decision ECB/2010/14 of the European Central Bank of 16 September 2010 on the authenticity and fitness checking 
and recirculation of euro banknotes (OJ L 267, 9.10.2010, p. 1). 

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will be applied in accordance with not only the applicable provisions of Union law but, in particular, 

Decision ECB/2010/14. 

ECB-PUBLIC 

This opinion will be published on EUR-Lex. 

Done at Frankfurt am Main, 18 September 2023. 

[signed] 

The President of the ECB 

Christine LAGARDE 

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