Low interest on bank deposits is due to the pursuit of the economy development. This is a result mainly of consumption and not saving. According to an analysis of the Banking Association in Bulgaria, at present one of the biggest problems facing the development of the Bulgarian economy is the low number of young people, as well as their unsatisfactory level of education.
According to the Association’s data, the prices of property in large cities are rising, which in turn relates to a large extent to the bank credit required in order to purchase a housing. This is why the BNB warned the banks in the country to pay attention about their credit policies. The association recalled the bum of credit due to real estate prices, which was observed in 2005 and 2007. The experts’ comments are that the central bank does not want to repeat any element of the scenario that happened 10 years ago.
The figures show that people are keeping on deposits large amount of money – over 70 billion. For Bulgaria, this is a record, but the saving concerns are not a phenomenon in any case. To walk the economy, people must not only save, they must consume, consume and business to invest and develop. The banking sector in turn must support the economy and it must also be developed with credit resources.
The association points out that interest rates will soon start to rise. This trend has already been noticed in the US, while Europe is waiting for inflation to jump to 2 per cent and then the interest rate will go up.
The association predicts that Bulgarian banks will become fewer, but it is a natural process of consolidation where the market is dominated by several large banks and reassured that such a situation is a sign for a mature economy. The consolidation of capital resulting from the merger of banks leads to greater stability.
Bulgaria’s willingness to join the euro area does not mean that this will happen, even if we are ready to a large extent and many transactions are carried out in euro, commented on analysts. The question is about the level of trust that the euro area countries give to Bulgaria.
Established in 1999, the monetary policy of the euro area countries is determined by the European Central Bank. It differs from the rest of the EU in its economic governance, particularly with regard to the creation of monetary and economic policy.
