Bulgaria Joins European Union

Syllabus: GS2/IR

In News

• Recently, Bulgaria became the 21st country to switch to the euro, nearly 20 years after the Balkan nation joined the European Union (EU).

Background 

• The Maastricht Treaty of 1992 established the European Union.
• It  paved the way for the formation of a common economic and monetary union, which is the European Economic and Monetary Union
• It allowed the adoption of a common currency, which would be accepted as the sole legal tender, the euro.
  • The euro was first rolled out in 12 countries on January 1, 2002. Croatia was the latest to join, in 2023.
• It also has a unified central banking system, which established the European Central Bank (ECB).
  • And a common economic region.

What is the Eurozone?

• The eurozone, or officially the euro area, refers to the geographic and economic region comprising those members of the EU that have fully adopted the euro as their official currency.
• Composition :  Bulgaria’s admission to the eurozone makes it the 21st nation out of 27 EU members to do so.
  • The remaining six use their own currencies instead.
    • Four microstates, Andorra, Monaco, the Vatican City and San Marino, also use the euro through agreements with the EU, while Kosovo and Montenegro use the euro as their sole currency without an agreement. However, none of these countries are not regarded as members of the eurozone.
  • Croatia was the last country to join the eurozone in 2023. 
• Eligibility  : To be eligible for eurozone membership, an EU country (except Denmark, which has an opt-out) must meet “convergence criteria” ensuring alignment with other members economically, socially, and politically.
  •  This includes adopting the euro, integrating into the common market, and adjusting national laws and monetary policies to comply with EU treaties, ensuring a smooth transition without disrupting the eurozone.

Benefits of joining the eurozone

• The eurozone provides its members with several benefits, including price stability, lower interest rates, and easier market access through a common currency. 
• The euro allows consumers to compare prices across member nations, reduces currency exchange costs, and facilitates trade, labor, and capital mobility.
• Members, like Bulgaria, gain a seat on the ECB’s Governing Council, shielding them from external shocks due to the eurozone’s economic size.
• Additionally, the euro, as the world’s second-largest reserve currency, strengthens European integration, boosts tourism, and promotes economic competitiveness.

Source :TH