site.bta Steve Hanke Advises Bulgaria Against Joining Eurozone

Steve Hanke Advises Bulgaria Against Joining Eurozone

Sofia, May 11 (BTA) - Addressing a news conference on Monday, US
applied economist Steve Hanke said that Bulgaria should not
join the eurozone, as it would be disastrous for the country.
Hanke took part in a Sofia forum on the need of financial
education for a sustainable economy. Deputy Prime Minister and
Labour and Social Policy Minister Ivailo Kalfin, Education and
Science Minister Todor Tanev and economists also took part in
the event.

According to Hanke, the currency board brings only positives for
Bulgaria and a eurozone entry will worsen fiscal discipline
which will be disastrous for the country. Hanke noted that
fiscal discipline due to the currency board gives Bulgaria a
unique market edge. He was adamant that joining the eurozone
would not bring more investors.

Hanke said that informally Bulgaria was already in the eurozone
and that it would be very unreasonable if it joined the eurozone
and ended up like Greece without fiscal discipline. Hanke
blamed Greece's plight on the Balkan mentality and the readily
available lending for eurozone countries.

Hanke said that the Greek economy will continue to slump and
perform worse than the forecasts. He said that the situation in
Greece was very bad and that it would be much better for the
eurozone, if Greece exited.

Hanke said that the currency board would offset the effect of
these development on Bulgaria. He said that apart from Corporate
Commercial Bank, the remaining banks in Bulgaria are stable,
underscoring that the central bank had made a grave mistake in
allowing this to happen. According to him, the central bank
should publish monthly the financial statements of the banks in
order to ensure greater transparency. Hanke said that he could
not analyze Bulgarian banks just like he does Greek banks
because of the lack of information.


The lack of financial education in Bulgaria is a huge problem
not only for the older Bulgarians, but also for the young
generation, said Hanke said at the opening of forum.

Hanke said that being financially literate means being informed
on how to manage your money best when investing, taking a loan,
concluding an insurance or paying taxes. If people do not have
basic information on this matter, they cannot make a good choice
among the financial products, the expert said.

He underscored that not only in Bulgaria but also in the world
as a whole the level of financial education is low, even in
countries such as the US. A World Bank survey conducted in
Bulgaria shows that 60 per cent of the population has low or no
financial literacy even for the most simple banking, he said.

The various financial industries are known to a different level
among the Bulgarian population, the survey also found. According
to the data, 35 per cent of the respondents are not familiar
with the commercial banks' products and cannot manage with even
the most simple banking operations; 45 per cent are not familiar
with the opportunities offered by insurance companies; 66 per
cent are not familiar with leasing services; 66 per cent are not
informed about the supplementary pension insurance; and 75 per
cent are not familiar with private pension funds. Bulgarians are
least familiar with the opportunities offered by loan
investment funds (80 per cent).

According to Hanke, these data prove a very high level of
financial illiteracy in Bulgaria and this is a huge problem. It
is expected that younger people have wider knowledge in this
sphere than the older generation, but the World Bank's survey
shows that the percentage of young Bulgarians who are not
familiar with financial products and services is even higher,
the expert said. In his opinion, the level of financial literacy
is so low because people often think they know more about
finances than they actually do.

Financial education should be provided in the private sector,
because the government could politicize this education when it
should be objective, Hanke said.