History shows that adopting the euro is much more than a technical formality. It is a catalyst for profound changes in both the financial markets and the daily lives of citizens. But the benefits are not automatic.

From a stockmarket perspective, joining the eurozone theoretically ticks several favorable boxes. First, the elimination of currency risk makes it easier for international investors to access the stockmarkets of the new member country. The investor base tends to broaden and market liquidity improves. This automatically leads to greater trading depth and a reduction in specific risk premiums.

Integration goes further. The regulatory harmonization that membership entails allows domestic issuers to benefit from a more fluid legal and operational environment that is better aligned with European standards. It is also accompanied by economic policy convergence, through compliance with the Maastricht criteria and the Stability Pact, which imposes budgetary discipline and a more rigorous macroeconomic trajectory.

Furthermore, integration into the eurozone often leads to lower interest rates—on both sovereign debt and private loans—due to a monetary environment that is perceived as more stable. Rates tend to align with those of the European Central Bank. The downside is that joining the euro means a loss of monetary sovereignty: the country can no longer adjust its key rates or devalue its currency in the event of a specific shock. The ECB takes over from the country's central bank.

But — and this is essential — for these positive effects to materialize, the joining country must meet certain basic conditions. It needs an economy that is sufficiently open to foreign trade to benefit from the opportunities of integration and an equally developed financial system to effectively recover incoming capital flows.

In practice, various studies show that most countries that have joined the EU have seen their GDP per capita grow significantly (by an average of 10% over ten years). Slovakia is a good example of this success. In the 1990s, the country successfully transitioned to a market economy and carried out tax reforms. Fiscal discipline and political stability enabled it to integrate smoothly into the eurozone in 2009. Estonia also successfully joined in 2011. After the 2008 financial crisis, the country managed to get back on track with a rapid return to fiscal balance and an economy focused on innovation and digitalization.

However, the effects have not been uniform, as in the case of Greece, which joined the eurozone in 2001. Growth was initially fueled by cheap access to credit, but structural reforms did not follow and the country collapsed during the sovereign debt crisis in 2010, which revealed budgetary weaknesses and unsustainable public debt.

What are the Bulgarian companies?

Bulgaria has only one listed company with a market capitalization of over $1bn. This is Shelly Group, a kind of mini Schneider Electric, specializing in home automation solutions for controlling and automating household equipment. The company is expanding rapidly internationally, although Western Europe remains by far its largest market. The competitive environment is becoming increasingly fierce, but the B2B offering is solid and the organic growth strategy is well financed. We analyzed Shelly Group in our columns at the end of last year.

Other major listed companies in the country include generic drug manufacturers Tchaikapharma High Quality Medicines and Sopharma, courier and door-to-door transport service provider Speedy, banking group First Investment Bank, and investment company Eurohold Bulgaria.