Bulgaria replaces bank note with coin

By Richard Giedroyc

No one seems to know when Bulgaria will drop its lev denominated currency for the European Union euro, but in the mean time Bulgaria’s central bank is going ahead with plans to replace the 2-leva bank note with a coin.

The exchange rate for two leva was at $1.13 US at the time this article was being written. Bulgaria currently uses a coin and bank note system of 100 stotinki equal to one lev. Coins are issued in denominations of 1, 2, 5, 10, 20, and 50 stotinki and 1 lev. The 1-lev coin replaced the bank note of the same denomination in 2002.

According to an Aug.5 announcement by Bulgarian National Bank Deputy Governor Kalin Hristov, the changeover will take place at the end of 2015. Since a changeover is now in motion it appears Bulgaria’s move towards adopting the euro is once more on hold. Hristov heads the central bank’s issue department.

The Aug. 5 issue of the Sofia (Bulgaria) news publication Novinite reported, “BNB has made a lot of efforts to reduce the expenses in the production of bank notes through the so-called tender procedure, which is in use by the European Central Bank. Hristov also revealed that all currency standards, which are required by ECB, have been implemented, Darik radio informs. The deputy governor added that a process is underway to certify the mint of BNB for printing euro bank notes with the aim of preparing the country for its participation in the eurozone.”

The current 1-lev coin is a ringed bimetal issue with a copper-nickel center and a brass outer ring struck in medal rather than in coin alignment. Bulgarian sources indicate the new 2 leva will have a brass center and a copper-nickel outer ring. The 1 lev features St. Ivan Rilsky (St. John of Rila) on the obverse. St. Paisius of Hilendar is to be featured on the new 2 leva. Paisius (1722-1773) was a national revival figure who also wrote an important history of Bulgaria.

Bulgaria became an EU member in 2007. Ever since that time there has been speculation regarding when Bulgaria will embrace the EU’s currency union as well. At one time the target date was to be Jan.1, 2012, however this plan was put on hold due to the worldwide financial crisis that began a year after Bulgaria joined the EU.

In 2009 the European Central Bank rejected a proposal to waive several of its otherwise required economic criteria to allow Bulgaria a fast track opportunity to embrace the currency union. It was learned two years later the push for early acceptance was instigated by Bulgarian Finance Minister Simeon Djankov. At that time Djankov suggested 2015 as a more likely date for conversion of the lev to the euro. This date, which does not at the time this article is being written look likely, was forecast based on Bulgaria’s improving economy following the Great Recession. To date four of the five convergence criteria for joining the currency union have been met.

Bulgaria’s current currency system is the “Fourth lev,” a coin and bank note system introduced in 1999 when the lev was denominated at 1,000 lev to one new lev. In turn this new lev was pegged to the German mark. Among other adjustments the then new currency system was no longer backed by either gold or silver. Bank notes issued beginning July 5, 1999, no longer carry a clause stating the currency is backed by gold or by bank assets.

The current 2-leva bank notes, which will be replaced at the end of the year, will be allowed to continue to circulate until they become worn and are withdrawn by banks. No information was immediately available regarding the distribution of the new coins.

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