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October 23, 2021

BNR will continue to diminish the reserve requirements

The National Bank of Romania (BNR) intends to continue the process of diminishing the reserve requirements (RMO), in view of getting aligned to pertinent European standards, Cristian Popa, vice-governor of the Central Bank in charge with coordinating the monetary policy, announced at “The Central & Eastern European Forum 2014” organised by “Euromoney” in Vienna, bursa.ro reports. He reminded that BNR decreased the RMO on RON and foreign currency liabilities in the first meeting dedicated to monetary policy this year, on January 8, with the purpose of stimulating banks to restart the crediting process and in line with the practices and standards of reserve requirements in effect at European level. The process must be take place in low steps, so the market can digest “as it should” the decisions of the Central Bank, Cristian Popa explained. The vice-governor admits that the decrease of the RMO can create a volatility of the exchange rate, but he does not see solutions outside the natural zone of equilibrium. The BNR official considers that the evolution experienced last week by the national currency against the EUR, which took the rate near 4.55 RON/EUR, was acceptable given that the starting point of the increase was compatible with what can be called “the correct value” of the exchange rate.
As for the reduction of the RMO on foreign currency liabilities, Cristian Popa explained that BNR is careful not to stimulate, via this indicator, a disintermediation which he said began increasing in terms of trend, but evolves of an ordered manner. Romania is in a better situation than other states of the region, given that the volume of disintermediation exceeds by little 10 percent of the GDP, according to the Central Bank official, who added that a change of the financing basis of credit institutions from foreign currency to RON cannot be forced, because the accumulation of internal resources, based on savings, needs time. Popa estimates that, on a long term, the driver represented by consumption will not remain in the property of population, so making calculations based on these scenarios is “an illusion,” in his opinion.

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