Category: blog

The biggest bank of Cyprus, Bank of Cyprus, is still in danger and it might require additional recapitalization according to Panicos Demetriades, the governor of the Central Bank. The amount that will be needed to secure the core tier 1 ratio of 9% will be made on the grounds of a value assessment and is expected to be ready in the end of June. Cyprus received ten billion euro after it signed a deal with the International Monetary Fund and Eurogroup, promising to restructure its banking system. The bailout was provided after many of the depositors have contributed have 37.5% of their EUR 100 000 deposits in order to save the bank at the end of April.

As the governor of the Central Bank said, the restrictions on bank transactions should be lift carefully to void triggering outflows of disruptive capital and certain liquidity problems. The European Central Bank, the European Commission and the International Monetary Fund have estimated an almost 9 % contraction of the Cypriot economy for 2013. According to Demetriades, the risks in front of the banking sector are high, but he added that when the banking system stabilizes, the economic activity will recover.

The virtues of the Schengen entry of Bulgaria and Romania are numerous for both countries and it is comes as no surprise their willingness to become part of the passport free zone. In the recent months however, after their application was postponed for indefinite period of time, the Bulgaria and Romania are feeling pushed at the edge. The European Union partners of the two countries are questioning their willingness to oppose the organized crime, the corruption and the illegal migration and are talking about the two countries low commitment to the rules and regulations of the law. Bulgaria is a member of the European Union since 2007 but that membership did not bring economic growth or stability as expected. Even so, the country has benefited from becoming a member, even though it still has issues to cope with.

The income per person has increased, the opportunities of the residents to work across Europe are many, but still Bulgarians and Romanians do not feel really integrated and the rejection of their entry to Schengen is yet another proof of that. Since Bulgaria has remained outside the Schengen zone and the free movement of people, the question whether it will accept the Euro currency is still not debated.

According to the information provided by the European Central Bank this Wednesday, the bailout of Cyprus offered by the European Union zone caused a drop in the number of bank deposits in April throughout the continent and especially in the seventeen member states. The stressful situation in Cyprus in March will be remembered for the fact that for the first time the European zone imposed losses on the people who have large deposits, aiming to get enough capitalization for the important banks in the country.

Serious depositors in other European countries, especially if coming from troubled economics are now expressing a fear that their savings could experience the same treatment if similar situation occurs in their own countries. It came as no surprise that the level of the bank deposits made in April fell significantly. The money that were withdrawn from Cyprus were put into deposits in the banks of the neighboring countries including Bulgaria and Estonia, but also in France and Germany, Austria and Belgium, as well as in Slovakia. The number of deposits made fell in Greece and in Spain, as well as in Slovenia and the Netherlands. As a result of all that, the local lending in many countries have decreased and the loans to business have fallen seriously. Throughout Europe the private sector has focused on reducing the indebtedness due to the weak economics and general uncertainty among people.

The Director of the Bulgarian Institute for Analysis and Assessment of Tourism gave an interview for FOCUS News Agency in the beginning of May. According to Mr. Rumen Draganov, Bulgaria should observe and obey the tourism legislation valid for the Schengen zone. Az Mr. Draganov said, Bulgaria is a European Union member and all travelers who have Schengen visas can come in the country even if they do not have a return ticket. As the Director of the Bulgarian Institute for Analysis and Assessment of Tourism said, it is not possible for other legislation to be active on the Bulgarian territory and it is not possible for a tour operator to have activities in Bulgaria if that tour operator is not registered under the Bulgarian legislation.

Mr. Rumen Draganov confirmed that the country should obey and observe the legislation of Schengen, as well as all EU directives, as well as the Tourism Act from 2002 that has been recently replaced by the Tourism Act from 2013. The other directives that have to be observed as well are the Consumer Protection Act and Directive 90314. This behavior of the authorities will confirm the good reputation that Bulgaria has among the travelers and the institutions in the European Union and in the Schengen zone.

An improved business situation will be among one of the benefits for Bulgaria is the country enters the Schengen agreement zone in the beginning or spring of next year. The abolition of the internal borders and the unified requirements as far as the goods are concerned will remove the barriers in front of Bulgaria and will alleviate the trade within the European Union. The implementation of the European standards that are applied at the outer borders will help the trade processes with third parties as well, as there will be control at one stop only and the faster transportation will be guaranteed. Besides that the border stops will be improved, as well as the quality of the services.

The local business in Bulgaria will enjoy a positive effect as well, since the companies will be able to offer their goods and services to the neighboring countries and the rest of the members of the Schengen zone. The customers will gain an access to alternative markets, will be able to use the nearby airports and will enjoy lower prices due to the competition. The entry of Bulgaria into the European border-free zone will have a positive effect on the trips from and to Bulgaria. People will feel free to travel around, without worrying for passport checks or waiting at the borders for hours.

When Bulgaria finally enters the Schengen zone, which will hopefully become a reality in the future, this will have its impact on the local business. What will the companies obtain from the membership in the free-travel Schengen area? From a practical point of view, the lack of borders will make easier the transport of goods and will alleviate the travel. The Bulgarian tour operators and travel companies will be in the position to offer various combined trips. With Bulgaria being member of the Schengen agreement zone, travelers from other countries will be more eager to visit the resorts of Bulgaria. This is especially valid for travelers from Asia.

The country could also benefit from being a transit state and the predictions are that there will be two min travel destination lines from Greece and Turkey to the countries in Western Europe and from the countries in Schengen zone that are traveling to the resorts of Greece, Turkey and hopefully, the cheaper Bulgarian resorts. In general, the membership in the passport-free Schengen zone will create additional conditions for the development of a common economic zone in the area. This includes integration of the value added taxes, which will further lead to more serious interdependence of the businesses in the area. Moreover, the companies will have the freedom to choose where to situated their service centers and their activities. These will be areas with reasonable office rental prices and highly-trained professionals.