I have listened carefully to the speeches of Mr. Enste and Mr. Ikiz. They gave us useful information about the shadow economy. I fully support their opinion. As a man who is coming from the practice I want to give some examples.

I would like to draw your attention to the banking sector and to make short explanation about how the shadow economy affects the whole economy through banks.

What is the role of the banks - to collect money from the people and to distribute this money for the economic activities. Briefly - to create capital accumulation. Now, the problem is beginning at the distribution stage. In order to grow their business, each company needs support from the banks. So, a lot of companies are coming to the banks asking for credit facilities. After their application the bank is examining their Balance Sheets and other figures. From the practice some conclusions appear:
1. Almost all companies are not showing their real business turnover and real figures. The firms are decreasing their turnover and (or) increasing their expenses in a formal way. The reason is not to show huge profit. This fact shows that the grey economy is still effective in Bulgaria. The banks cannot have clear picture for the company's business and this fact is increasing the risk of the credit. Sometimes, the bank becomes too much suspicious and starts to refuse financing to proper companies because the bank is considering them as a part of a grey economy. This event is strongly valid for the foreign management of the banks in Bulgaria.
2. The grey economy is a strong factor for increase of corruption in the banking sector. As the companies are not showing their real situation, they are trying to obtain financing through offering bribes to the authorized personnel in the banks. Unfortunately, we should confess that some times these actions are quite successful.
3. Besides the bribe the companies from the grey economy are trying to commit fraud in order to facilitate their financing. There are a lot of examples for documents with false figures, duly certified by chief accountants, expert accountants or managers.
4. In the event the company form the grey economy is successful to receive financing from a bank through a fraud or bribe, there appears a huge possibility this credit not to be repaid and to be turned to a bad loan. The increase of the bad loans is not damaging the particular institution only; this event is really harmful for the economy of the country.
5. The influence of grey economy in the banking sector is not only related with granting credits. Another important area is the attempt for money laundry and export of convertible currency abroad. As a positive issue we should stipulate that nowadays the banks in Bulgaria are quite strict and are checking very carefully the documents accompanying wire transfers. Anyhow using bribes and documentary fraud sometimes such transactions are performed. In this event the key role is played by the Bulgarian Bureau for Financial Investigation.
6. Recently another side of the shadow economy was discovered in the banking sector. In the banks were caught some false banknotes with really high quality printed in Bulgaria. Even sometimes the cashiers were unable to recognize the false money. That means that the shadow economy is quite strong and has got enough funds in order to produce such forged documents. This fact leads to some additional expenses for each bank in order to improve the equipment and the qualification of the cashiers.

As a general conclusion we could say that the banks could (and should!) play essential role in the process of enlightening of the shadow economy in Bulgaria. They have key position in the chain of the documentary fraud and bribes. Having strong banks shall interrupt the process of forgery and shall cut the negative string of criminal attempts. Besides, the efforts to cheat a bank leads to corruption in the other areas - notary transactions, accounting and auditing transactions, lawyers, tax officers, customs, etc. The government should think seriously and should take certain measures in this area.

Thank you very much for your attention.