Discretion lets Croatia in the euro area in 2023, but leaves Bulgaria out

In: SEER: journal for labour and social affairs in Eastern Europe, Band 25, Heft 2, S. 183-194

Abstract

This article – written originally as a blog post for the think tank Bruegel – reviews the decisions made in June 2022 to allow Croatia into the euro zone but, in contrast, to make no change in the status of Bulgaria which, nominally, thus remains an EU Member State with a derogation from introducing the euro but one subject to complying with the requirements to allow it to do so. The author notes that, while the Bulgarian legislation on central bank independence remains an outstanding issue, there are other aspects of the decision to allow Croatia in but to refuse Bulgaria which cause disquiet. In reviewing price stability statistics on the basis of different measures, the author concludes that these indicate a level of decision-making discretion, creating a grey area in the criterion, as well as uncertainty over how comparative inflation performance is judged and a level of dubiety. He concludes that a rethink is necessary on how to interpret 'best performers' and that the time is right to fix the flaws in the existing criterion by switching to comparators which are closest to the average for the euro area as a whole.