July 13 (SeeNews) - The finance ministers of the euro area member states and the European Central Bank (ECB) said that Bulgaria could simultaneously join the Exchange Rate Mechanism (ERM II) and the banking union after a positive assessment of ECB, which will take up to one year to be completed.
"Once they have provided a positive assessment, a decision will be taken by the ERM II parties on the formal application of the Bulgarian authorities for ERM II participation. The decision will be linked to the ECB decision on close cooperation, in full respect of the conditions specified in the legal framework. This would imply that Bulgaria simultaneously joins ERM II and Banking Union," a statement posted on the Council of the EU website on Thursday reads.
The ECB is expected to conclude its comprehensive assessment within approximately one year after Bulgaria's formal application for close cooperation.
"We call on the Bulgarian authorities to thoroughly implement the reforms monitored by the Commission under the Cooperation and Verification Mechanism in the areas of judicial reform and the fight against corruption and organised crime in Bulgaria, in light of their importance for the stability and integrity of the financial system," the ministers said in the statement.
Earlier this month, Bulgarian finance minister Valdislav Goranov and central bank governor Dimitar Radev said in a letter of commitment that Bulgaria expects to simultaneously join ERM II and the banking union by July 2019.
In the letter, the country committed to improve banking supervision by entering into close cooperation with the European Central Bank, to strengthen insolvency and anti-money laundering frameworks, enhancing supervision of the non-banking financial sector.
Commenting on the finance ministers' statement on Friday, Dutch-based financial services group ING said that Bulgaria will most probably fulfil the requirements for joining the banking union and ERM II simultaneously but that it is unlikely to achieve a reasonable level of real economic convergence in order to limit its time spent within ERM II to the minimum of two years.
"ING doubts that satisfactory progress will be made on the recommendations coming under the Cooperation and Verification Mechanism (CVM) and a reasonable level of real economic convergence would be achieved in order to limit the time spent within ERM II to minimum two years," ING said in a statement.
However, according to the financial group, the new requirements that go beyond the original nominal Maastricht criteria, look necessary after the European debt crisis.
"Bulgaria’s hurdles to euro adoption and a new set of requirements related to both institutional and real convergence should become relevant for authorities in Romania and Croatia which expressed their intentions to join the currency bloc," ING added.
Bulgaria and Romania became EU members in 2007, and six years later Croatia too joined the bloc.
In May this year, the ECB and the European Commission said the country is not prepared to join the eurozone as it does not meet all criteria. The ECB said that Bulgaria should deal with macroeconomic imbalances, and needs to adopt laws to preserve central bank independence, in order to meet criteria for joining the eurozone.
The European Commission said in its convergence report published together with the ECB's report that Bulgaria does not fulfil the conditions for the adoption of the euro as its legislation, and its law on the central bank in particular, is not fully compatible with the requirements of the treaty on the functioning of the EU.