IJASOS- International E-journal of Advances in Social Sciences

Abstract

The development of the Bulgarian banking system is a
complex and dynamic process that is driven by the effect of both internal and
external factors. The country’s membership in the EU favours inflow of foreign
capital into the system in the form of the purchases of most Bulgarian
commercial banks. The domination of European capital forms a number of
positives but also possibilities for distress by line of ownership.

As a Member State of the EU with derogation, Bulgaria
does not participate in the European Monetary Union. However, apart from the
choice of the euro as a nominal anchor of the Currency Board, it can also be
observed that there is tighter integration with the European financial system
and, over the last few years, government declarations expressing the desire to
become a full member of the Eurozone. That leads to commitments that
demonstrate the viewpoint that it is possible to achieve significant
improvements of the main dimensions of the system’s functionality while also
increasing its credibility in the eyes of Bulgarian consumers of bank services
and European investors.

In 2014, the Bulgarian bank system faced a serious
challenge – the crisis surrounds Corporate Commercial Bank (CCB), one of its
biggest commercial banks. The goal
of this article is to examine the methods, effectiveness and costs of
stabilizing the system. At the same time, the authors also examine the
approaches that would have been applicable to the same situation had the
country been a member of the European Banking Union and had CCB been under the
Single Supervisory Mechanism. The task, based on the above-mentioned case, to
evaluate the positives and potential negatives of Bulgaria joining the Banking
Union and to support membership in the European Banking Union. That would
contribute towards additional stabilization of the Bulgarian banking sector and
more effective resolution of capital adequacy issues, liquidity, solvency and
security.