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Bulgaria Central Bank Governor Slams Harmful Economy Myths

Date: 25.01.2010

Bulgarian National Bank Governor, Ivan Iskrov, has confirmed that the BNB had EUR 12,9 B worth of currency reserves at the end of the 2009. Iskrov stated that there are three myths that are harming the Bulgarian economy that must be dissipated.

According to him the first myth is that the current account deficit is unsustainable, which will lead to a further collapse in foreign investment, the BNB reserves being depleted and a collapse of the currency board. He countered this by saying that currency reserves have not only not decreased, but have increased slightly: at the end of 2008 EUR 12,7 B, at the end of 2009 – EUR 12,9 B.

Iskrov continued that the second myth is that the fixed exchange rate does not allow rapid adaptation of the Bulgarian economy and therefore limited competitive advantages, especially in times of crisis.

He added that the third myth, which is a cause for non-investment in the countries of Central and Eastern Europe including Bulgaria, is the myth that there will be an avalanche of bad loans in our economies and in particular in Bulgaria.

Iskrov concluded that from February 1 Target 2 – BNB will be introduced, which will allow commercial banks and their customers to make transfers in euros between each other, which will not go through correspondent banks as is the case currently but instead directly through the BNB and ECB.

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