The Bulgarian National Bank and the European Central Bank formally concluded an agreement to establish a currency exchange swap line of EUR 2 billion. The swap line will remain in force until December 31, 2020, or as long as necessary, the BNB said.
Under the new swap line, the Bulgarian National Bank will be able to raise up to 2 billion Euros in exchange for BGNs at the current fixed exchange rate if additional liquidity is needed.
The maximum maturity for each withdrawn amount will be three months.
The central bank's announcement also stresses that Bulgaria is preparing to participate in the Exchange Rate Mechanism (ERM II), which is a prerequisite for a Member State to join the eurozone.
Since the start of the coronavirus crisis, similar currency swaps have been signed up between the ECB and the central banks of Denmark and Croatia.
"This is a great support for Bulgaria and a guarantee for the additional stability of the currency board, which should be maximally protected in a crisis situation", Prime Minister Boyko Borisov stated in a conversation on this topic with ECB President Christine Lagarde, the government's press service said.
Borisov noted that the country's admission to the ERM II will bring exceptional benefits to the economy, and membership in the banking Union is a guarantee of transparency of the work of Bulgarian banks.
Prime Minister Borisov also emphasized the concrete steps and efforts that the government, banking sector and supervision in our country have implemented in the preparation process. Borisov said that our country has good credit history in fiscal and budgetary discipline and has the second lowest debt of a country in the EU as a debt-to-GDP ratio.
