Romania – member of Banking Union’s Supervisory Mechanism next year


Romania could finalize all preparations in order to become a member of the Banking Union’s Single Supervisory Mechanism next year, a mechanism that will start working on November 4 this year. The National Bank is responsible with Romania’s process of joining the Single Supervisory Mechanism.
“The steps to be taken are not easy: on the one hand, there is the assessment of the assets of banks, currently underway, and on the other there is a highly complex legislative reform of institutions that entails a transfer of sovereignty from Romania to that part of the European Union that decides to be a part of the Banking Union, a new Euro-plus zone. It is very honouring that the euro-plus zone will probably include Romania as well. It is possible that subsequently other countries outside the Eurozone will join in. For the time being we are the only ones having voiced the intention to join the Banking Union that fast,” National Bank of Romania (BNR) Vice-Governor Bogdan Olteanu stated yesterday at the “Mediafax Talks about Banking” conference.
He pointed out that the entire legislation has to be transformed at national level, namely the banking law, the Guarantee Fund law, the legislation concerning intervention, resolution and stabilization measures, so that the said prerogatives could fall on the European structure to the extent in which the European legislation stipulates that. The BNR Vice Governor explained that it is better for Romania to join the Banking Union system before adopting the Euro, the latter being a more complex process entailing development and the recovery of economic lags, since the access to information, decisions as well as easier and cheaper financing is greater and the baking risk is lowered.
Remarkable stability outside Euro Zone
In what concerns adopting the Euro on January 1, 2019, he says that Romania is showing “remarkable” stability in what concerns the ten indicators, “the biggest stability outside of the Euro Zone.” “This is a quality because it means we have exited the instability area. The challenge for Romania however is to make up for the lagging behind, because we have to continuously grow economically for a relevant number of years,” Olteanu emphasized. Also, Olteanu said Romania is no longer the only country in its geographical area to have set a date for it, given that the Czech president recently announced that 2017 could be set as a target date for the Czech Republic’s accession to the Eurozone and the entire Baltic area will be in the Eurozone by year-end.
In his turn, Maciej Piechocki, manager of the BearingPoint financial services company, considers that the Single Supervisory Mechanism is a good idea but the ECB lacks experience in banking supervision.
Insolvent companies’ debts 20 pc of GDP, EUR 25 bn
In another context, Romanian Banking Association (ARB) Executive President Florin Danescu, attending the event, said the debts generated by insolvent companies in Romania amount to EUR 25 billion, which is 20 percent of the country’s GDP. ‘The new law of insolvency is indeed better than the previous one, but this big question persists – the way of applying it. If this law is applied as before, we won’t advance. (…) Actually, the banks are the smallest creditors; (…) the state, we estimate, has [to receive] some EUR 10 billion of debts of insolvent companies, and EUR 10 billion are (debts) to other companies, because of financial stalemate,’ Danescu explained.

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