Financial stability, monetary autonomyand fiscal interference:Bulgaria in search of its way, 1879-1913

The Bulgarian monetary system was established, immediately after independence.Having experienced it already under Ottoman rule, newly independent Bulgaria adopted thebimetallic standard. Without being a member of the Latin Monetary Union, it tried broadlyto follow the principles of the convention, yet with some exceptions, the most important ofwhich concerned the limit on silver coinage. The absence of such a clause in Bulgaria turnedout to be crucial since the financial needs of the recently established state triggered excessivesilver coinage which resulted in a persistent agio - a positive and variable difference betweenthe legal and the commercial value of silver coins. The interference of fiscal authoritiesobstructed the Bulgarian National Bank’s ability to manage money in circulation and tosecure the monetary stability required by economic development. The attempts of theBulgarian monetary authorities to eliminate the agio were unsuccessful until they acquiredthe right to issue silver-backed banknotes. Soon after that, in 1906, Bulgaria introduced ashort-lived typical Gold standard....