The preparation of the migration of card payments to those in euros and the corresponding accession by the end of the year of the BORICA card payment system to TARGET is in an advanced phase, said in an interview with BTA the Deputy Governor of the Bulgarian National Bank (BNB) and Head of the "Banking" Department; Petar Chobanov.
The BNB, together with the banking community and "BORICA" AD, has already implemented several strategic projects: full accession to TARGET2-Securities (a securities settlement platform), STEP2 and TIPS. The latter allows for immediate local and cross-border payments in euros – up to 10 seconds at any time of the day. From 2023 all customer payments in levs now comply with SEPA standards, which significantly facilitates the transition to payments in euros, Chobanov also said.
He added that 25 percent of household deposits and 32 percent of those of companies are already in euros
After joining the eurozone, the "Banking" department at the BNB will maintain key functions - supervision of payment systems and service providers, management of TARGET-BNB and participation in the monetary policy of the Eurosystem. The BNB will be able to provide liquidity support to banks when needed and will continue to collect statistical information in cooperation with the ECB, Chobanov also said.
Chobanov also emphasized the importance of the digital euro, which will offer free and secure payments, promote financial inclusion and strengthen the strategic independence of the European payments market.
The full text of the interview follows:
In recent years, the BNB and representatives of credit institutions in our country have repeatedly declared the readiness of various banking systems for the euro. One gets the impression that one has to press a button and the transition from lev to euro will take place in a second. Is that really the case?
- In the field of payments and financial market infrastructures, for several years the BNB, as a payment system operator, together with the banking community, "BORICA" AD, the Depository of Government Securities of the Bulgarian National Bank (DDSC) and "Central Depository" AD are actively working on the preparation for the migration of payments and settlements in euro. In accordance with the implementation of the BNB's commitments under the National Plan for the Introduction of the Euro in the Republic of Bulgaria, several very important projects were completed. One of these projects was completed in 2023 - this is the accession of the BNB, banks and the BISERA customer payment system in euro to the consolidated TARGET services platform (TARGET) of the Eurosystem. The accession of DDSC, "Central Depository" AD and banks to the TARGET2-Securities securities settlement platform was implemented, which was another step towards integration with the euro area.
The BNB, together with the Ministry of Finance, "BORICA" AD and banks in the country, implemented a large-scale project for the migration of budget payments in levs to SEPA standards. Since last year, all customer payments in levs have been made in accordance with the business and technical requirements of the euro area, which will significantly facilitate their migration to SEPA payments in euros.
In July 2024, the project to ensure full SEPA reachability of payments in euros was successfully completed through the participation of the BNB in the STEP2 system of EBA Clearing, which provides banks with the opportunity to make customer payments to over 4,800 payment service providers from all countries of the Single Euro Payments Area SEPA. Since December 2024, the BNB, as the operator of the TARGET-BNB system component, and "BORICA" AD, as the operator of the BISERA payment system, have participated in TIPS, providing the opportunity for banks and other payment service providers to make local and cross-border customer instant payments in euros, in accordance with the requirements of the pan-European scheme of the European Payments Council SEPA Instant Credit Transfer (SCT Inst) – credit transfers, executed on a 24/7/365 basis, within a maximum of 10 seconds from debiting the payer's account to crediting the amount to the recipient's account and receiving the corresponding confirmation from the payer. Clients of TIPS participating banks can make instant payments in euros to citizens and companies from 37 countries. Active work is underway to join the banks in the country to TIPS, which will allow maintaining the level of services for bank clients in terms of instant payments even after the adoption of the euro.
Preparations for the migration of card payments to those in euros and the corresponding joining of the BORICA card payment system to TARGET by the end of the year are in an advanced stage.
In the area of payments and settlement, operational preparation is in the final stage and all activities are being implemented on time.
What percentage of retail payments are made via cards and other digital channels?
- According to the latest update of the payment statistics for Bulgaria as of 30.01.2025 on the ECB data portal, the total number of non-cash payments (credit transfers, direct debits, card payments, electronic money payment transactions) in Bulgaria by individual and legal entity customers with a payment service provider in 2023 amounted to 572.3 million, worth BGN 1,098.5 billion. For the first half of 2024, we have 309.4 million, worth BGN 565.5 billion.
The number of card payments initiated electronically remotely or on-site in 2023 amounted to 310.8 million, with their value being BGN 20.0 billion. BGN, and for the first half of 2024 their number is 164.8 million, and the value is 9.4 billion BGN.
What share of the savings of Bulgarian citizens and Bulgarian companies, according to the latest data, is in euros?
- According to data from monetary statistics as of the end of February 2025, deposits in euros of the Households and NPISH sector represent 25 percent of the total deposits of the sector, and the share of Non-financial and financial enterprises – 32 percent of all deposits held by these enterprises, which underlines the fact that the euro is already well accepted among the population and businesses due to our economic ties with the euro area and the EU.
What role will the management for which you are responsible in the BNB have after entering the euro area?
- The functions of the BNB are clearly defined in the Law on the Bulgarian National Bank. According to the Law on the BNB adopted in February 2024, which will enter into force from the date of adoption of the euro by the Republic of Bulgaria, among the main tasks of the BNB are the establishment and operation of efficient payment systems in accordance with European Union law, which includes the operation of the national system component TARGET-BNB, part of the Eurosystem's TARGET platform, uniting the T2 payment system, the TARGET-Securities securities settlement system and the TIPS euro instant transfer system. Other main tasks are the regulation and supervision of the activities of payment system operators, payment service providers and electronic money issuers in the country in accordance with the Payment Services and Payment Systems Act. As at present, the above functions of the central bank will continue to be part of the responsibilities of the "Banking" department.
Upon accession of the Republic of Bulgaria to the euro area, the department will participate in the implementation of the monetary policy of the Eurosystem by supervising the implementation of the mandatory minimum reserves maintained by banks with the BNB.
In addition, the BNB will be able to provide emergency liquidity assistance (ELA) to a solvent bank, outside the scope of monetary policy operations, as the "Banking" department will be responsible for this important function of the central bank.
Last but not least, the BNB will continue to carry out statistical activities related to the performance of its functions, both as part of the national statistical system, and to assist the ECB in collecting statistical information in order to carry out the tasks of the European System of Central Banks (ESCB).
Do you think that consumers and businesses would benefit from the digital euro and what would they be?
- The digital euro is another step in the development of payments due to the "boom" in e-commerce and the increased consumer demand for digital services. The idea of the digital euro is to transfer the characteristics of cash to the digital sphere, which has many benefits for all participants in the payment process – consumers, merchants, banks and the Eurosystem as a whole.
The digital euro will offer consumers and businesses in the euro area a payment solution with the highest standards of privacy compared to other payment methods – neither the ECB nor the national central banks will be able to identify the user of the digital euro, nor the subject of the purchase or payment itself.
Payments with the digital euro are intended to be free of charge for consumers.
At the same time, the digital euro is also a tool for financial inclusion – it is expected to be designed to meet the needs of people with disabilities and those who do not have access to a bank account or lack digital or financial skills.
The digital euro is a pan-European solution that will be adopted across the euro area and will provide merchants with an easier and cheaper alternative compared to the current fragmented payments market. Merchants will be able to receive payments instantly, without additional fees.
The digital euro is expected to reduce the European payments market's dependence on foreign companies, which threaten the autonomy and sustainability of European payment services and pose a risk to the monetary sovereignty of the euro area. The digital euro will offer a basis for further innovation and make the European payments market more competitive.