Georgi Stoev: Changing Laws 'Creates Dangerous Precedent'

Georgi Stoev, economist and managing associate at Industry Watch Bulgaria. Photo by BGNES

Economist Georgi Stoev told Novinite's Bulgarian-language website that the events around Corporate Commercial Bank (KTB) should not give ground to legal amendments.

"If we start changing legislation after a single case, this means we will set a precedent and give the occasion to other interested groups to seek legal changes, regardless whether in the financial sphere or in another one," Stoev argued when asked if new rules should be introduced to guarantee the deposits in KTB exceeding EUR 100 000.

Such amounts are not secured under Bulgarian law in case of a bank run or failure.

Stoev believes laws should be amended "rarely" and with "strong argumentation" and not just "to put out a certain fire".

Introducing fresh legislation to handle a certain case would send "an undesirable message to investors. They expect that the environment should remain predictable, stable and with laws changing seldom", the expert warned.

He stressed a solution cannot be modeled after a European example, as states there lately suffered "banking crises of a systematic character".

The economist cited the situations in Cyprus and Belgium, where a number of banks were saved, to point every crisis in Europe had different financial roots.

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