Questions and answers on the Convergence Report 2025 on Bulgaria

1. What is the Convergence Report?

 Convergence Reports are issued every two years, or when there is a specific request from a Member State to assess its readiness to join the euro area. The last regular report, which also covered Bulgaria, was published in June 2024. The European Commission's Convergence Report 2025 was prepared upon the request of Bulgaria on 25 February 2025.

The European Commission's Convergence Report 2025 concludes that Bulgaria fulfils the conditions for adopting the single currency. It is the basis for the Commission proposal for a decision by the Council on the adoption of the euro by Bulgaria.

The Convergence Report examines Bulgaria's fulfilment of the four nominal (see below) and the compatibility of its legislation with the requirements of the Treaty and the Statute of the European System of Central Banks and of the European Central Bank (ECB). The Commission's assessment also takes into account the additional factors relevant to economic integration and Convergence, including balance of payments developments and the integration of product, labour and financial markets.

The Convergence Report of the European Commission is published separately but in parallel with the ECB's own Convergence Report.

2. What are the Convergence criteria?

Member States adopting the euro are required to have achieved a high level of sustainable economic convergence, which is examined in the Convergence Report by reference to the Convergence criteria . These criteria (also referred to as the ‘Maastricht criteria') are set out in Art. 140 (1) Treaty on the Functioning of the European Union (TFEU). They are intended to ensure that a country is ready to adopt the euro and that its economy is sufficiently prepared to do so.

Sustainability is a key aspect of the assessment of the Maastricht criteria, which means that the progress made with Convergence must be grounded on structural elements that guarantee its durability, rather than on temporary factors. Illustrated in a simplified way, the criteria are as follows:

The Treaty also prescribes an examination of the compatibility of a Member State's national legislation with the Treaty and with the Statutes of the ESCB and ECB. The legal compatibility concerns mainly three areas: central bank independence, the prohibition of monetary financing and the integration of the national central bank in the EuropeanF System of Central Banks (ESCB).

In addition, the Treaty also calls for an examination of other factors relevant to economic integration and Convergence. These additional factors include the integration of labour, product and financial markets and the developments in the balance of payments. The assessment of additional factors is seen as an important indication of whether the integration of a Member State into the euro area would proceed smoothly.

3. What does meeting the Convergence criteria mean?

Meeting these criteria indicates that a country's economy has reached a reasonable degree of Convergence with that of the eurozone. It reflects the country's ability to maintain economic stability and integrate into the eurozone's economic framework.

The economic entry conditions are designed to ensure that a Member State's economy is sufficiently prepared for the adoption of the single currency and can integrate smoothly into the euro area without risk of disruption for the Member State or the euro area as a whole. 

Meeting these criteria does not automatically result in eurozone membership. The decision requires approval from the EU Council, based on a proposal from the European Commission after the European Parliament and the ECB have given their opinions. 

4. Are all non-euro area Member States obliged to join the euro?

All Member States, except Denmark which negotiated an opt-out arrangement in the Maastricht Treaty, are legally committed to join the euro area. However, it is up to individual countries to calibrate their path towards the euro and no timetable is prescribed.

The Member States that joined the EU in 2004, 2007 and 2013, after the euro was launched, did not meet the conditions for entry to the euro area at the time of their accession. Therefore, their Treaties of Accession gives them time to make the necessary adjustments.

5. Does the Convergence Report guide countries in their pending steps towards the euro?

The Convergence Report assesses whether non-euro area EU Member States meet the necessary conditions for adopting the euro. It provides a detailed analysis and insights into the economic convergence of these countries and can suggest areas where further improvement is needed.  However, it does not prescribe specific policy measures.

The Convergence Report is a crucial document for both the countries aspiring to join the euro area and for the EU institutions. It ensures transparency and provides a clear assessment of the readiness of the countries. This helps in maintaining economic stability and coherence within the EU.

The report is also the basis for a possible Commission proposal to the Council to allow a Member State to adopt the euro.    

6. What are the main findings of the 2025 special Convergence Report requested by Bulgaria?

The 2025 report finds that Bulgaria fulfils the conditions for adopting the euro:

• Legislation in Bulgaria is compatible with the requirements of the Treaty and the Statute of the European System of Central Banks and of the ECB.
• Bulgaria fulfils the criterion on price stability. The average inflation rate in Bulgaria during the 12 months to April 2025 was 2.7%, below the reference value of 2.8%. A review of a broad range of indicators does not identify causes for concern regarding the sustainability of price stability.
• Bulgaria fulfils the criterion on public finances, as it is not subject to a Council Decision on the existence of an excessive deficit.
• Bulgaria fulfils the exchange rate criterion. It joined the Exchange Rate Mechanism II (ERM II) in July 2020 and had been participating in the mechanism for almost five years at the time of the adoption of this report.
• Bulgaria fulfils the criterion on the convergence of long-term interest rates. The average long-term interest rate in the 12-months to April 2025 was 3.9%, below the reference value of 5.1%.

The Commission has also examined additional factors, including balance of payments developments, the integration of markets and the institutional environment.

In light of this assessment, the Commission considers that Bulgaria is ready to adopt the euro on 1 January 2026.

7. What is the process for a Member State to adopt the euro, and what are the next steps for Bulgaria?

Once a Member State fulfils all required criteria, the European Commission's Convergence Report forms the basis for deciding on its euro adoption. The Commission submits a proposal to the Council, which – after consulting the European Parliament, and following discussions in the Eurogroup and among the Heads of State or Government – decides whether the country fulfils the conditions to adopt the euro.

If the decision is favourable, the Economic and Financial Affairs (ECOFIN) Council takes the necessary legal steps and – based on a Commission proposal and after consulting the European Central Bank (ECB) – adopts the conversion rate at which the national currency will be replaced by the euro. This rate then becomes irrevocably fixed.

In the case of Bulgaria, the Commission has concluded that the country fulfils the four nominal Convergence criteria and that its legislation is compatible with the requirements of the Treaty and the Statute of the European System of Central Banks and of the ECB. Taking into account the additional relevant factors, the Commission considers that Bulgaria is ready to adopt the euro.

As a result, the Commission has adopted proposals for a Council Decision and a Council Regulation on the introduction of the euro in Bulgaria. The Council of the EU is expected to take the final decision in the first half of July, following the necessary consultations and discussions.

Meanwhile, Bulgaria needs to continue with the practical preparations required to ensure a smooth changeover to the euro. The Commission's services remain in close contact with stakeholders from the public and private sectors involved in these preparations and stand ready to provide the necessary technical assistance to the Bulgarian authorities.

8. How does the Convergence Report relate to the process to enter ERM II?

The Exchange Rate Mechanism (ERM II) was set up on 1 January 1999 as a successor to the original ERM to ensure that exchange rate fluctuations between the euro and other EU currencies do not disrupt economic stability within the single market. It also aims to support non-euro area Member States in preparing for participation in the euro area.

The Convergence criterion on exchange rate stability requires participation in ERM II. Participation is voluntary, but the exchange rate criterion for entry into the euro area specifies that a country must take part in the mechanism without severe tensions for at least two years before euro adoption. Under ERM II, the exchange rate of a non-euro area Member State is fixed against the euro and only allowed to fluctuate within set limits.

Entry into ERM II is decided upon request of a non-euro area Member State by mutual agreement of all ERM II participants: the euro-area Member States, the ECB, and the ministers and central bank governors of the non-euro area Member States participating in the mechanism, i.e. currently Denmark.

Bulgaria announced its intention to join ERM II in July 2018 and committed to implementing a number of measures – the so-called prior commitments – before entering the mechanism, in order to ensure smooth participation in ERM II. It joined ERM II in July 2020, having fulfilled these commitments. It also committed to and implemented a range of additional measures - known as post-entry ERM II commitments - aimed at preserving economic and financial stability and achieving a high degree of sustainable economic convergence.

For more information

Press release: Bulgaria meets criteria to join the euro area on 1 January 2026

European Commission Convergence Report 2025

ECB Convergence Report 2025

Previous Convergence Reports

The euro area

Economic and Monetary Union