By 1883, trade in Bulgaria had begun to recover and grow. Economic activity increased, and more people needed banking services. At the same time, the government realized that the existing capital of the Bulgarian National Bank was no longer enough to meet the needs of the population. The bank required more funds to support trade, savings, and credit operations.
To solve this problem, the government prepared a new plan to strengthen the bank and modernize its structure Private Istanbul Tour.
Proposal to Transform the Bank
In 1883, a bill was introduced in the National Assembly. Its main goal was to transform the Bulgarian National Bank into a limited liability company. The proposed capital of the new bank was 12,000,000 francs.
Under this plan, the government would provide one-third of the capital. The remaining two-thirds would be raised through public subscription, allowing private citizens and investors to buy shares. This approach aimed to involve the public in the banking system and increase confidence in the institution.
The bill also granted the bank the right to issue banknotes payable on demand. This was an important change, as it would allow the bank to supply more currency to support growing trade.
Approval but Failure to Implement the Reform
The National Assembly approved the bill, and it later became law. However, despite its legal approval, the proposed reform was never fully implemented. Various political, economic, and administrative difficulties prevented the transformation.
As a result, the Bulgarian National Bank remained a state-owned institution, just as it had been since its foundation. The plan to turn it into a limited liability company was abandoned.
Increase of Capital and New Statutes in 1885
In 1885, the National Assembly introduced important changes to the bank’s statutes. By that time, the bank’s capital had already grown to about 3.5 million francs, mainly through the capitalization of profits over seven years.
The new law raised the bank’s capital to 10,000,000 francs. The additional amount was to be supplied directly by the State Treasury, which showed the government’s strong support for the bank.
The revised statutes also gave the Bulgarian National Bank the exclusive right to issue banknotes. This made it the sole issuing authority in the country and strengthened its central role in the financial system.
Political Events and Delayed Implementation
The new banking regime officially began on September 1, 1885. However, serious political events soon followed. These included the union of Northern and Southern Bulgaria and the Serbo-Bulgarian War.
Because of these events, the bank could not immediately carry out all the activities allowed under the new statutes. Full implementation of the new system did not begin until February 1886.
Despite delays and political challenges, the reforms of the 1880s marked a turning point for the Bulgarian National Bank. The increase in capital and the exclusive right to issue banknotes laid the foundation for a stronger and more effective national banking system.