The Future Looks Bright for Bulgarians! Or Does It?

Bulgaria is facing a historic turning point: the planned adoption of the euro on January 1, 2026. With this step, the country will become the 21st member of the eurozone, marking a new era of economic integration and stability. While the government and central bank present this as a move toward growth and increased trust, there is another side of the story that worries many Bulgarians – the future of the informal economy and how black money will be handled in the new system.

🇧🇬 Bulgaria and the Euro: A Long Road to Integration

Since joining the EU in 2007, Bulgaria has aimed to adopt the euro. After several delays—mainly due to high inflation and political instability—the target is now set for January 2026. The government has expressed its readiness, and central bank governor Dimitar Radev emphasizes that euro adoption will strengthen Bulgaria's monetary policy under the European Central Bank (ECB), ensuring trust, stability, and predictability.

Despite these optimistic statements, polls show that only about one-fifth of Bulgarians support the switch to the euro, while more than half feel poorly informed about the process. This reflects deep concern among the population, especially among those engaged in the informal economy.

 The Informal Economy: A Hidden Reality

Bulgaria has long had a significant informal economy, with many transactions occurring outside the official system. This includes everything from undeclared cash wages to larger under-the-table deals in the construction and service sectors. As the country prepares to change currencies, a critical question arises: what will happen to all this black money?

During a currency transition, old banknotes must be exchanged for the new currency. To do this, people usually have to go through banks or official channels—where they may be asked to explain the origin of their money. This becomes a serious issue for those holding large amounts of cash with no supporting documents or declared income.

The Role of Banks and EU Regulations

Banks in Bulgaria will play a central role in the transition. According to EU anti-money laundering directives (AML), banks are obligated to report suspicious transactions and demand documentation for large deposits. This means individuals attempting to exchange large sums of cash must prove the legal origin of the funds.

However, the EU's anti-money laundering efforts have been criticized as fragmented and poorly coordinated. A special report by the European Court of Auditors highlights institutional fragmentation and weak cooperation at the EU level when it comes to acting on identified risks. Nonetheless, banks in Bulgaria are expected to enforce EU rules strictly during the transition.

 Potential Consequences for the Informal Economy

The euro transition may bring several consequences for Bulgaria’s shadow economy:

1. Increased consumption – People may spend their cash quickly to avoid scrutiny.

2. Asset purchases – Property, cars, and other assets may be used to “launder” money before the change.

3. Use of intermediaries – Money may be split and exchanged through friends or family to stay under the radar.

4. Loss of capital – Those who don’t manage or dare to exchange their cash risk losing it once the old currency becomes invalid.

 Risks for the Economy and Society

While the long-term outlook includes greater economic stability, the short-term risks are real:

• Inflation – A spike in consumption could drive up prices.

• Real estate bubble – A rush into property may overheat the housing market.

• Social unrest – People who feel targeted or financially damaged may protest or stir instability.

 Conclusion: A Bright Future with Shadows

The adoption of the euro represents an important milestone for Bulgaria’s economic development. It brings opportunities for investment, trust, and integration into the broader EU financial system. However, the success of this transition depends on how well the government and banks manage the challenges tied to black money and the informal economy.

By combining strict compliance with EU regulations and clear communication with the population, Bulgaria can navigate this complex transition—and truly ensure a brighter future for all its citizens.