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October 5, 2022

Georgescu, BNR: Money getting scarce and more expensive

The First Deputy Governor of the National Bank of Romania (BNR), Florin Georgescu, says the next period will be a difficult one form an economic point of view not only for Romania, but for the entire Europe, HotNews.ro informs.

‘It will be a difficult period. We see major risk agglomerations in the world in general and in Europe in particular. The profound changes of economic and financial paradigm the first consequence of which is the fact that money is getting more and more scarce and expensive push banks into a different kind of profitability battle,’ Georgescu explained during the ‘Piata Financiara’ Award Gala. He said he was surprised by the prize offered to him, adding that it was as if the community of automobilists had awarded the traffic police chief for an effective regulation and monitoring of public roads.

‘I think it would be worthwhile remembering that, during those boom years when money was made ‘out of nothing’ on financial markets under deregulation conditions, BNR was blamed for its <neo-conservationism> and <neo-orthodoxy>. Reality now proves that BNR was guilty of neither. It was just efficient’, Georgescu further said.

According to the former finance minister, regulations were not at all cumbersome. ‘That is proved by the fact that, from 2004, when credit started expanding faster in Romania, to 2011 included, the net profit in our banking system was RON 16.7 bln. Even if in 2010 and in the first three quarters of 2011, in the context of generated by the shocks propagated by the global crisis, some banks reported a total loss of RON 1.3 bln, the banking sector still finished on a net earning of over RON 15 bln (or EUR 3.5 bln). Let’s admit it: it’s a fruitful result,’ Georgescu also said.

‘The symptoms of the economic crisis have turned out to be the most painful. On the other hand, the remarkable thing is that the net loss registered by some of the banks is not so big as to endanger the banking system in general or a particular bank. And this is something we owe to the National Bank, who has never abdicated the golden rule: conjugation of the regulation and supervision process with the requirement of securing financial stability,’ Georgescu also said.

Even if today Romania still has to fight with the economic crisis, it does not have to cope with a financial crisis as well, and that we owe to the fact that regulatory and supervision policies have worked together effectively,’ Florin Georgescu concluded.

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