BNR spokesman on Valcov’s suggestion to scrap ROBOR: Serious confusion in understanding money market

Spokesman of the National Bank of Romania (BNR) Dan Suciu turned critical on Darius Valcov, economic advisor to the Prime Minister, saying that the latter’s suggestion that the formula used to calculate the interbank offered rate ROBOR should be changed or that the benchmark rate should be removed all together proves he is in serious confusion about the money market and its role in the supply of liquidity to the economy, banks and the Treasury.

“The National Bank of Romania discusses with the Ministry of Public Finance, and I do not understand in what capacity does Mr. Valcov intervene. Moreover, he seems to be in a serious confusion regarding the money market and its role in the supply of liquidity to the economy, the banks and the Treasury. (…) For example, the average of interbank transactions these days is below the three-month ROBOR because the Ministry of Finance is drawing money from the market because taxes and fees are being paid. Now what shall we do, accuse the Finance Ministry for the ROBOR growing? The money market is working efficiently, and such statements only unjustly cast doubt on it. Given that the three-month ROBOR was incorporated in the interest rate structure through an Emergency Ordinance, I truly don’t understand what the central bank should do,” BNR spokesman Dan Suciu told AGERPRES.

Advisor to the PM Darius Valcov said on Monday in an interview for Bloomberg that there is “an easy way” for the central bank to render the so called “greed tax” harmless, as all rate-setters have to do is change the formula used to calculate the ROBOR interbank rate, or scrap it all together. The move would also end a situation in which, according to him, the banks lend to one another at “unjustifiably” low costs.

“I hope we can get a radical change in the way ROBOR is calculated or even see its demise,” Valcov said Monday in a phone interview. “A decision will be made with the central bank, which can modify internal rules on market rates without requiring parliamentary approval,” said Darius Valcov.

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