Bulgaria asks for a banking union

Bulgaria can immediately, within a few days, submit its formal application for membership of the European Banking Union. That's what the European Central Bank said a few minutes ago at a press conference in Brussels after the Eurogroup meeting on the occasion of the meeting. a letter from Bulgaria announcing that she was taking a package of commitments to enter ERM II waiting room and banking union. 19659003] From the letter sent on June 29, it becomes clear that Bulgaria will file the application for the banking syndicate on the first working day after a positive sign from the European authorities as it was given today, which which means that tomorrow – Friday, Sofia the official request to the ECB enters. In addition to joining the Banking Union, Bulgaria has also made 6 more specific commitments – strengthening of banking supervision, macro-prudential oversight, non-banking financial sector, fight against money laundering, management of public enterprises and settlement of bankruptcies [19659003] By letter, Bulgaria insists on joining the ERMII until July 2019, although the European institutions have made no commitment for a precise date, although the EC indicated that the process should last about one year. The final decision on the banking union will be taken by the ECB and ERMII by the Eurogroup, Denmark and the ECB, with a positive opinion from the EC

A new large-scale banking system

for accession to the ERMII, the European institutions have asked Bulgaria to join the banking union if it wants the leu to be admitted to the ERMII, condition of & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; Accession to the euro area

Negotiations with Bulgaria for entry into the European Union bank will be led by the supervisory board of the ECB. To be a member, the country has three conditions: changes in legislation, a change of banking supervision and a new overview of the banking system through badet tests and stress tests similar to those completed in 2016

. that the EC and Bulgaria declare that within one year the country will implement the steps to enter the banking union, the ECB said the process could go even further, according to which will be identified during the negotiations [19659009LesautoritésbulgaresespéraientRANCEquel'entréedansl'unionbancaireserauneconditionsuffisantepoursejoindreàMCEIID'aprèslesdéclarationsdel'EurogroupedelaCEetdelaBCEetladéclarationécriteformelleaprèslaréunionilestclairquelapromesseestpourl'instantpolitiquenonlégalemaisilestformellementindiquéquelepaysentreralemêmejourEnréponseàunequestionduFinancialTimeslevice-PremierministredelaCEValdisDombrovskisétaitfermementconvaincuquelafindumécanismedecoopérationetdevérificationpourlaBulgariedanslaluttecontrelacorruptionetlecrimeorganisén'étaitpasuneconditionl'entréedansl'unionbancaireetl'ERMII[19659005] The Eurogroup has accepted the condition for Bulgaria to link membership to ERMII and the banking union to continue to apply to all other states wishing to adopt the euro for

Bulgaria unconditionally agrees to perform the orders of the ECB

According to the EU treaties, Bulgaria is obliged to join the banking union at the time of its accession to the euro area. Nevertheless, non-euro area countries may partially enter the banking union and, most importantly, the so-called "close cooperation" mechanism.

De jure entry into the banking union is done by a decision of the ECB to establish close cooperation between it and the Bulgarian National Bank (NBB) is favorable to Regulation 1024 of 2013

Before that, however, Bulgaria must address a request to the ECB, the European Commission, the European Banking Authority and other Member States

ECB requests concerning and banks and to provide complete information about the Frankfurt institution for this purpose. At the same time, the country does not have the right to vote in the board of directors of the institution. If the NBB does not respect the orders of the ECB, Frankfurt may close close cooperation

If Bulgaria joins the Banking Union, it can come out at least three years after its entry

If Bulgaria does not at all agree a decision of the ECB, such as bankruptcy, and its objection is not accepted, it may request the immediate termination of close cooperation and will not be bound by the decision of Frankfurt. In this case, new close cooperation can be reached at the earliest after three years.

Up to now, Bulgarian institutions responsible – MF and BNB have not explained what Bulgaria meant for membership in the banking union. According to BNB's Kalin Hristov, entry into the banking union is leading to asymmetries in decision-making for non-eurozone countries, according to Kalin Hristov, deputy governor of the NBB. Probably for such reasons, so far, no country not belonging to the euro area has cooperated closely with the ECB

"A country close to the cooperation will face a treatment extremely asymmetric and will be left out of the supervisory decision-making process Board of Governors of the European Central Bank (ECB), ECB Supervisory decisions that are not legally binding outside the euro area will have to be duplicated by acts of the local auditor, who will be responsible for litigation will not have access to ECB liquidity support, and there will be no access to the single stabilization mechanism as a potential source of funds for direct recapitalization and indirect banking, "says Hristov

Bulgaria will have to transfer part of its 400 million BGN

Since 2014, the Banking Union is incomplete and, at this point, it s'. act ess entirely of two elements. The first is the single supervisory mechanism through which the ECB directly controls the three largest banks in the country concerned, but it can also control the smaller ones. Indeed, the Frankfurt institution directly controls the 120 largest financial institutions in the euro area and indirectly – 3400 smaller banks

The second element is the unified banking restructuring mechanism whose purpose is to d & # 39; bring bankruptcies with minimal damage to taxpayers and the economy. In this case, the ECB makes the final decision to identify and declare whether a bank is bankrupt or likely to go bankrupt

The mechanism in question has a special restructuring fund that is fueled by bank contributions and pays a portion of the bankruptcy costs. However, it is essential that the big banks deposit at least 8% of their own funds in the bankruptcy bank.

To join the European Restructuring Fund, which will have a vote in It transferred three years ago part of the National Rescue Fund, which currently has about 400 million leva, thanks to which foreign banks, for example Italian , Greek, could be restructured in case of bankruptcy, etc. can receive t the money from the fund
Until 2024, the European Restructuring Fund must accumulate 55 billion euros

Although the ECB decides the bankruptcy of the bank and the European Council for Restructuring determines the available funds, the Council of EU Ministers can oppose the restructuring decision, then bankruptcy falls under national law

What the euro area countries can not understand, it is a general system of guarantee of deposits, because it requires the creation of a common fiscal capacity in the euro area, that is to say that the governments of some countries pay deposits in others for which it does not exist. There is no consensus.

Thus, in practice, the ECB decides to bankrupt a bank in Bulgaria, but the guaranteed deposits will be paid by the National Guarantee Fund. deposits in banks. Moreover, unlike eurozone countries, Bulgaria will not have access to other ECB financing possibilities, including credit lines for Bulgarian financial institutions. Bulgaria will not participate in the European Stability Mechanism (ESM), which has provided billions of euros to the Greek government, which is part of the eurozone

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