How the EU can help Bulgaria avert another banking crisis
In a few short weeks Bulgarian authorities are due to announce the name of the next governor of the country’s central bank. Until half a year ago, this seemed like a routine decision that would not attract the sustained attention of the general public.
However, in the summer of 2014 a run on Corporate Commercial Bank, Bulgaria’s fourth largest bank (KTB), shattered the myth that the country had become an island of financial stability in Eastern Europe. In the wake of KTB’s collapse, Bulgaria’s banking sector is at a critical juncture and much rides on what changes the next governor will bring.
Can the sector reinvent itself, as it did following a meltdown in 1997? Or will the systemic problems uncovered by the KTB debacle persist and deepen, ultimately threatening financial stability?
Ivaylo Iaydjiev, DPhil candidate at the Blavatnik School of Government, reflects on three critical ways that the EU can support central bank reform in Bulgaria.
