Yesterday, July 10th, European finance ministers discussed Croatia’s and Bulgaria’s accession to monetary union as part of ECOFIN (Economic and Financial Affairs Council). It was decided that both countries meet the criteria to join Exchange Rate Mechanism II and the common banking supervision.
Croatia and Bulgaria have been trying to join the euro area for some time. In contrast to other countries that have joined the euro in the past, both countries had to initiate additional reforms beforehand. According to today’s decision, the two countries will have to narrow the fluctuations in the exchange rates of their local currencies against the euro. In addition, the three largest banks will now come under the single European banking supervision of the ECB. The transition phase lasts at least two years, followed by a one-year preparation phase. The accession to the euro would be possible in 2023 at the earliest. Lithuania was the last member to join the currency area in 2015.
MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group commented:
“The accession plans of Bulgaria and Croatia show the attractiveness of the common currency. If all EU countries join the currency area in the long term, Europe will continue to grow together.
Croatia and Bulgaria should not only meet the formal entry criteria for debt levels and price stability, but also tackle the fight against money laundering and financial crime with determination. In this year’s country-specific recommendations from the Commission, Bulgaria was asked to tackle deficits in combating money laundering. Unlike in neighboring Romania, convictions for corruption in Bulgaria are a sad rarity.
Bulgaria is also a tax haven and systematically sells citizenships. Bulgaria’s corporate profits are taxed at just 10% and additional tricks even allow for 5%. Bulgaria thus weakens in particular neighboring Greece. Before Bulgaria is accepted into the euro, the euro zone should agree on a common corporate minimum tax rate. The Commission must open infringement proceedings against all countries that sell Schengen visas or citizenships including Bulgaria.
The monetary union can only be strong if everyone is equally committed to the fight against financial crime and no member opens the door to dirty money. For Croatia and Bulgaria, the EU must not repeat the mistakes of past euro accession like that of the Baltic States.”
Our study on poor fight against corruption in Bulgaria: http://extranet.greens-efa-service.eu/public/media/file/1/5452