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January 27, 2022

Central bank governor Mugur Isarescu says he won’t seek new term at BNR helm

Governor of the National Bank of Romania (BNR) Mugur Isarescu said on Monday that at age 70 he does not contemplate a new term at the helm of the National Bank.

“I cannot any more. I am 70. Your question is no longer topical. … What is indeed topical is the solidity of this institution. Its credibility is crucial. Apart from interest rates, exchange rate, minimum reserve requirements and work with the markets, credibility is our main working instrument,” said the highly experienced top banker, who took the opportunity to chide the media for uncritically taking over misleading stories that harm the central bank’s credibility, like alleged gain possibilities from gold, or the contrived story about 40 tons of gold having vanished from the country’s reserve. “Let me ask you this: How many economists swallowed this nonsense with interest rates for gold, at a time when interest rates for foreign currency are negative? Gold has always carried a far smaller interest rate than the reserve deposit currencies: the euro, the dollar. Before the crisis, interest rates for the dollar or euro were 4 – 5 percent, and gold was barely at 1 – 2 percent, and only for certain periods. So, some TV channels swallow the bait and host talk shows where the claim is made that in a time when real currency interest rates are negative one can gain from gold interest rates. That’s over the top,” Isarescu told a press conference in a more extensive reply, when asked by reporters if he would still bear with BNR for another term.

The BNR governor said that this debate has affected the central bank’s credibility and asked the media watchdog to address the issue of a televised show claiming that 40 tons of the country’s gold have vanished and where the BNR experts’ call-ins were jammed.

This must set us thinking. This institution works with data that is crucial to the country’s stability and I’d say security, with the country’s international reserve, Isarescu said, cautioning that distorted communication of reserve figures poses a great issue to the country’s stability.

He also pointed out that BNR is not a single-headed institution but is managed by a Board of Directors and the professionals sitting on it do not deserve to be targeted by media smearing campaigns.

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