Currency Board vs Currency Union: A Theme Park Analogy for Bulgaria’s Transition to the Euro

In 2026, Bulgaria transitioned from a currency board arrangement to fully adopting the euro and becoming its 21st member state. Many have questioned the suitability of the euro and have argued that it would create higher inflation. Traditionally, interest rate parity is used to argue that a currency board and a currency union are very similar monetary regimes. This paper provides an alternative mechanism. It uses a unique theme park analogy based on the supply of local and anchor currencies to show that the two regimes are indeed functionally equivalent and would thus lead to very similar inflation outcomes.