The Bulgarian National Bank (BNB), founded on January 25, 1879, is more than just a financial institution; it is a foundational pillar of the modern Bulgarian state and a resilient witness to the nation's turbulent journey through wars, political upheavals, and economic transformations. Its establishment, mere months after the restoration of Bulgarian sovereignty following five centuries of Ottoman rule, was a critical act of state-building. Conceived to foster economic revival and provide financial stability, the BNB's 147-year history is a chronicle of Bulgaria's struggle for monetary sovereignty, its navigation of geopolitical storms, and its ultimate integration into the European financial architecture. As the 13th-oldest continuously operating central bank in the world, its evolution from a state-controlled commercial entity to an independent modern central bank within the Eurosystem encapsulates the broader narrative of a nation asserting and defending its economic identity .
The Foundation in a Nascent State
The BNB was born in the immediate, chaotic aftermath of the Russo-Turkish War of 1877-78 and the subsequent Congress of Berlin in 1878, which created the autonomous Principality of Bulgaria. The country emerged from Ottoman rule with a fragmented economy, no unified currency, and a dire need for institutions to manage public finances and catalyze development . The founding act was carried out by Prince Alexander Dondukov-Korsakov, the Russian Imperial Commissioner overseeing the provisional administration in Bulgaria. On January 25, 1879, he approved the BNB's first Charter, a document that laid out its initial, somewhat limited mandate .
This original Charter, drafted with the assistance of Russian financial experts, envisioned the BNB not as a classic central bank with note-issuing powers, but as a state-owned commercial bank designed to stimulate commerce. Its stated purpose was "to assist in the revival and proper development of trade, to regulate commercial relations and credit in the Principality of Bulgaria" . The state provided an initial capital of 2 million French francs, a significant sum intended to anchor the new institution's credibility. The Bank was permitted to accept deposits, provide loans against securities and precious metals, discount commercial bills, and manage government funds . However, conspicuously absent was the right to issue banknotes, a core function of monetary sovereignty.
The operational timeline of its first year reveals a swift move from planning to action. On April 4, 1879, Ludovig Carbonneur, a Russian finance official, was appointed as the first acting Governor . The Bank was officially inaugurated in a ceremony in Sofia on May 23, and on June 6, it executed its first financial operation: the state deposited 8,687,043 francs into the Bank, of which 2 million were allocated as its founding capital . This sequence of events marked the birth of Bulgaria's central financial organ, tasked with the monumental challenge of building a modern monetary system from the ground up.
Establishing Monetary Sovereignty: The Creation of the Lev
One of the BNB's most urgent and defining early tasks was to replace the hodgepodge of foreign and Ottoman coins in circulation with a unified national currency. This goal was achieved with the Law on the Right to Mint Coins in the Principality, passed on May 27, 1880 . This legislation created the Bulgarian lev, naming it after the Bulgarian word for "lion," a symbol of strength. The law pegged the new currency to the French franc at par, aligning Bulgaria with the silver standard of the Latin Monetary Union and signaling its intent to integrate with European financial systems. The following year, 1881, saw the minting of the first Bulgarian coins in denominations of 2, 5, and 10 stotinki ("hundredths") .
The Bank's transformation from a commercial state bank to a true central bank of issue was formalized in 1885. The Law on the Establishment of the BNB, passed that January, profoundly reorganized the institution . For the first time, it granted the BNB the exclusive monopoly to issue banknotes. The law stipulated that these notes were to be backed by gold reserves equal to at least one-third of their nominal value. It also expanded the Bank's capital to 10 million gold leva and broadened its operations to include lending to municipalities and agricultural funds. Later that same year, the BNB issued Bulgaria's first official banknotes, a critical step in consolidating state control over the money supply and facilitating larger-scale economic transactions .
The decades that followed were a period of learning and stabilization. The Bank established its first branch in Ruse in 1884, and by the outbreak of the Balkan Wars in 1912, it had built a network of 80 branches across the country, becoming deeply embedded in the national economy . However, its early years were not without difficulty. Efforts to formally adopt a gold standard in the 1890s failed due to fiscal pressures and poor harvests. The Bank also had to contend with a major domestic monetary crisis at the end of the 19th century and the ripple effects of international financial crises in the early 20th century, gradually gaining experience as a regulator of the monetary system .
Trials of War and the Quest for Stability
The first major test of the BNB's resilience came with the period of continuous warfare from 1912 to 1918, encompassing the Balkan Wars and World War I. As with many central banks at the time, the BNB's independence was severely compromised by the state's desperate financial needs. It was compelled to suspend the lev's convertibility into precious metals and to provide virtually unlimited credit to the government to finance military operations . This led to a massive expansion of the money supply. For example, the monetary base exploded from 453.7 million leva in 1915 to over 2.37 billion by 1918. The consequence was severe inflation and a dramatic depreciation of the lev, which lost over 300% of its value against the British pound between 1915 and 1919. The post-war burden was compounded by the heavy reparations imposed by the 1919 Treaty of Neuilly, which further drained the nation's reserves .
The interwar period was defined by a strenuous struggle to restore monetary stability and the Bank's institutional integrity. The pivotal moment arrived in 1928 with a large "Stabilisation Loan" coordinated by the Financial Committee of the League of Nations . This international loan had a triple aim: to stabilize the devalued lev, to reinforce the BNB's capital, and to liquidate the government's accumulated war debt to the Bank. It enabled Bulgaria to finally adopt a gold-exchange standard, fixing the lev at 92 leva to one gram of pure gold. This reform was accompanied by a new Law on the BNB in 1926, which enacted the "most profound institutional changes" to date. The law purged the Bank of commercial banking activities, transforming it into a genuine, modern central bank focused on monetary policy and banking supervision . These reforms provided a crucial anchor during the global Great Depression (1929-1933).
This era of relative stabilization and growth was also when the BNB's iconic headquarters in Sofia was constructed. Designed by architects Ivan Vasilyov and Dimitar Tsolov in a severe, non-decorative Neoclassical style, the building was erected between 1934 and 1939 and remains the Bank's home today . Its imposing presence on Battenberg Square symbolized the institution's growing permanence and authority.
Transformation and Modernization
The conclusion of World War II and the establishment of a communist government in Bulgaria led to the BNB's most radical transformation. In 1947, the Law on Banks mandated the nationalization of all private banks, which were then merged into the BNB . The Soviet-style "monobank" system was imposed, completely abolishing market-based banking. The BNB was stripped of its autonomy and converted into a monolithic accounting and control organ for the centrally planned economy. It was directly subordinated to the Council of Ministers and the Minister of Finance, its primary function being to provide financing for state-mandated production plans rather than to regulate the money supply. In this era, the Bank's role in managing the state's foreign currency monopoly was paramount, though it was eventually shared with the newly created Foreign Trade Bank in 1964 .
The fall of the Berlin Wall and the collapse of the socialist bloc initiated another profound metamorphosis. In 1991, with the passage of a new Law on the BNB and the Commerce Law, Bulgaria began its return to a market economy. The BNB's independence was restored, and it was given the critical responsibility of supervising the newly re-established commercial banking sector . However, this transition was rocky. A devastating banking and hyperinflation crisis in 1996-1997 necessitated a radical solution. In July 1997, Bulgaria introduced a currency board arrangement, a strict monetary regime that pegged the lev first to the German Deutsche Mark and then, from 1999, to the euro at a fixed rate of 1.95583 leva for one euro. Under this system, the BNB's Issue Department could only issue new leva if it had equivalent foreign exchange reserves, effectively eliminating its ability to finance government deficits and imposing extreme fiscal discipline . This painful but necessary move finally tamed inflation and restored macroeconomic stability.
Integration into the European Union
Bulgaria's accession to the European Union on January 1, 2007, marked the final, decisive stage in the BNB's modern evolution, integrating it into a supranational financial framework. It immediately became a full member of the European System of Central Banks (ESCB), committing its policies to supporting price stability and the broader economic objectives of the EU . This membership entailed a gradual harmonization of Bulgaria's banking regulations and supervisory practices with EU standards.
A landmark amendment to the Law on the BNB in 2005 had already fortified the Bank's institutional, functional, financial, and personal independence, explicitly prohibiting it from providing direct funding to public institutions a crucial safeguard learned from past crises . As a member of the ESCB, the BNB took on roles within European Banking Supervision and became Bulgaria's National Resolution Authority, working closely with bodies like the European Banking Authority and the Single Resolution Board. This integration culminated in Bulgaria's adoption of the euro on January 1, 2026. On that date, the BNB became a full member of the Eurosystem, with the European Central Bank taking over key monetary policy functions, while the BNB retained vital tasks such as financial supervision, managing cross-border payment systems, and representing Bulgaria's economic interests within the unified framework .
Architectural and Cultural Legacy
Beyond its economic functions, the BNB has cultivated a significant architectural and cultural heritage. Its headquarters, a protected cultural monument since 1978, is more than an office building; it is a symbol of national financial sovereignty . The interior, designed by artists Ivan Penkov and Dechko Uzunov, includes historically preserved spaces like the Governing Council chamber and the Governor's study. The chamber features a stained-glass window created in Munich, depicting motifs from Bulgarian economic life. The building also houses the BNB's own museum, which showcases the history of Bulgarian money, from the first coins and banknotes to the present day, preserving the nation's numismatic heritage for the public .
From its inception in the precarious dawn of a liberated state to its current role within the Eurosystem, the history of the Bulgarian National Bank is inextricably intertwined with the history of Bulgaria itself. It has been a lender to governments at war, a tool for socialist central planning, a guardian of stability during economic crisis, and finally, a bridge to European integration. Its story is one of adaptation, resilience, and an enduring pursuit of the monetary stability necessary for national sovereignty and prosperity.


