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The Bulgarian National Bank does not intend to extend the moratorium on loan payments to domestic consumers and businesses.
This was announced by the central bank governor Dimitar Radev during an online meeting with representatives of the American Chamber of Commerce in Bulgaria, BNT reports.
The event was attended by more than 70 representatives of the organization, including heads of banks in our country.
BNB Governor Dimitar Radev
According to BNB data, the loans are stable so far. Radev especially draws attention to the fact that banks must be careful in identifying and assessing the risks they take when making loans.
Despite the incentives to increase lending, banks should not do so at any cost or risk.
The central bank remains ready to implement, if necessary, additional measures, most of which relate to capital requirements, and is closely monitoring the situation in the event of a loan default.
According to BNB data, as of October 1, banks have deferred loans of BGN 9.1 billion., which is approximately 15 percent of the total amount of loans granted.
Deferred loans to companies amounted to BGN 6.96 billion and loans to households amounted to BGN 2.1 billion.
Banks have announced a moratorium on the payment of loans to individuals and companies affected by the covid epidemic. The maximum deferral is up to 6 months. In early summer, the moratorium was extended until September 30, and loans can be postponed until March 31, 2021.
According to the Governor of the BNB, the fact of Bulgaria’s accession to the Banking Union in 2020 demonstrates the stability of the Bulgarian banking sector.
The country’s indicators, including capital adequacy, liquidity ratio and profitability, are better than the European Union average.
The only exception is the level of non-performing loans: after a steady decline in recent years, it has reached around 6%, compared to the EU average of 3%.
Stay in the euro area: at least three years
During the online meeting it became clear that the most optimistic option for Bulgaria’s accession to the eurozone is 2024. Until then, our country will remain in the so-called. waiting room for the euro area: the ERM monetary mechanism 2. Denmark has been in it for 20 years and Lithuania for more than 10.
The bigger question is what needs to be done while we are at ERM II, explained the BNB governor.
“We must fully comply with the convergence criteria (the so-called ‘Maastricht criteria’). They require control over inflation, public debt, budget deficits, exchange rate stability and domestic interest rates,” Radev added.
This means that Bulgaria must keep inflation no more than 1.5 percentage points above the average of the three Member States with the lowest inflation, budget deficits below 3% and gross public debt below 60%. of GDP, a stable exchange rate under ERM II conditions, as well as long-term nominal interest rates up to 2 percentage points above those of the three Member States with the lowest inflation.
In addition to the Maastricht criteria, the entire process involves the fulfillment of commitments both before and after accession to ERM II.
The BNB insists that the country’s previous stay in the eurozone waiting room has been only an advantage for Bulgaria.
How the transfers will be made after the adoption of the euro
The current RINGS and BISERA bank transfer systems will stop working when we join the euro. RINGS payments will migrate to the TARGET platform for payments in euros.
Bank customer payments through BISERA will migrate to the Single Payment Zone in SEPA Euros.
National payment traffic will be completely transformed. Currently, together with BORICA, we are implementing a project for immediate payments in BGN worth up to 100,000 BGN.
These payments will be in line with the pan-European framework for SEPA credit transfers.
Starting in November 2022, there will be a new consolidated TARGET platform, combining TARGET2, TARGET2-securities and TIPS. Respectively, the BNB, 18 commercial banks, BORICA and the central depositories are preparing for this new consolidated platform.
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