ECONOMY FINANCE&BANKING

Exchanges of retorts between the prime minister’s adviser and the central bank governor. Isarescu: We’ve witnessed a lame attack on BNR. Allegations that someone is manipulating the interest rates are dangerous

Gov’t, National Bank and banks must reach consensus on ROBOR, argues PM advisor Valcov

 

Darius Valcov (photo), advisor to the Prime Minister, told a televised broadcast on Sunday evening that changing the interbank offered rate ROBOR is out of question, but the government, the National Bank and the banks must reach a consensus in this regard.

“This is not about changing the ROBOR or arithmetic, we need to reach a consensus with the National Bank, and it would be desirable to reach common ground with the banks too, since I think the people already agree that interest rates are very high. Reaching this three-way consensus is a must. National Bank experts have told us the ROBOR is linked to inflation, but they are telling people this only now, in 2019, when inflation is 3.3 pct, so the ROBOR too should be 3 percent .When inflation was negative, when we had deflation, why have all the European central banks considered fit cutting the [key interest] rate, whereas the National Bank did not move to this effect, yet in the case of the opposite trend the National Bank did not intervene,” Valcov told private broadcaster Antena 3.

He added that in 2015 – 2016, when the European Bank “poured” money into the market and all other national banks reduced their key policy rate, the National Bank “kept the key rate the highest, at 1.75 percent,” so that the gap, the difference between interest on credit and deposit interest remained the largest in the EU.

“This difference virtually generates gains for the banking system. In Romania, the banks’ gains are the highest in the EU, three times the average and seven times higher than in Germany,” Valcov argued.

Referring to the upcoming hearing of BNR governor Mugur Isarescu in the Parliament expert committees, Valcov said the country’s top banker should prepare his answers well.

 

Valcov asked if he aspires to BNR Governor’s office: I believe neither I nor Mr Isarescu can aspire to this office

 

Asked whether he aspires to the office of BNR Governor, Darius Valcov, adviser to the Premier, stated on Sunday, for Antena3, that in his opinion neither incumbent BNR Governor Mugur Isarescu nor he can aspire to this office.

“No. I believe that neither I nor Mr Isarescu can aspire to this office, because if you have some unresolved things behind you it’s good not to go and try at the National Bank,” Valcov said when asked whether he aspires to the office of BNR Governor, considering that Mugur Isarescu’s term at the helm of the National Bank expires this year.

Asked, at the end of January, for his comment on the possibility that Darius Valcov might take over as Governor, BNR Spokesman Dan Suciu stated for Realitatea TV: “I don’t know, and I believe there are hundreds of specialists in this bank who deserve a professional leadership. If he can deliver a professional leadership, nothing to say.”

The term of BNR’s current leadership expires in October 2019.

 

Darius Valcov points out he has not opened a bank account to collect his pay and this is a form of boycott, asking the BNR to intervene in what concerns the difference between the interest rates for loans and those for deposits

 

Premier’s adviser Darius Valcov stated on Sunday evening, on Antena3, that he has not opened a bank account to collect his pay and this is a form of boycott. The statement came after the revelation he made during a previous talk-show, namely that he does not have a bank account to collect his pay, sparked comments and ironies. He asked the BNR to intervene in order to lower the “huge” difference between interest rates for loans and those for deposits.

“Not having a bank account is not illegal. But when the gap between the interest for loans and the interest for deposits is 1 to 8, something practiced only in Romania out of all the 28 European states, this gap that the banks are practicing in Romania prompts some to boycott, and it is practically a boycott. I believe the National Bank must intervene and rapidly lower this huge difference,” Valcov stated when asked whether he has opened a bank account since the previous talk-show.

He explained that when you keep your money in the bank and receive 1 percent, while the inflation rate, according to the BNR, is always 2.5 percent +/- 1 percent, your purchasing power drops no matter what you do if you keep the money in the bank.

“Until this problem with the money paid to people is solved, I don’t believe there’s a point,” Valcov said.

At the end of January, he stated he does not have bank accounts nor credit cards, adding that he knows “many people” who were left without money in their bank accounts because the money was “eaten up” by fees.

“There are so many people who have money in their accounts, and they lost the money, because the fees ate the money up, not someone else, don’t believe the money disappeared… They left 500 dollars and 10 years later they discovered that… It’s even the case of the [former] Prime Minister (Mihai Tudose – editor’s note), I know it from other persons. The fees are high now,” Darius Valcov said.

 

Isarescu: We’ve witnessed a lame attack on BNR. Allegations that someone is manipulating the interest rates are dangerous

 

The National Bank of Romania (BNR) has been the target of “lame” attacks lately, and the allegations that someone is manipulating the interest rates are dangerous for economic stability, against the backdrop in which “they went for BNR’s throat,” BNR Governor Mugur Isarescu stated on Monday at the presentation of the report on inflation.

The BNR has recently been criticised on topics regarding the ROBOR index and the exchange rate. At the end of last month, Senator Daniel Zamfir (ALDE) claimed that the ROBOR index is “fixed” via an agreement between commercial banks, with BNR’s involvement, and asked Governor Mugur Isarescu and Competition Council President Bogdan Chiritoiu to take part in hearings within the Senate’s Economic Committee.

When asked whether he aspires to the office of BNR Governor, Darius Valcov, adviser to the Premier, stated on Sunday, for Antena3, that in his opinion neither incumbent BNR Governor Mugur Isarescu nor he can aspire to this office.

On Monday, Isarescu warned that these statements are dangerous.

“Statements according to which someone is playing around with the interest rates, is manipulating them, are dangerous. They can be rooted out by looking at the reports. It’s painful that some don’t read them and level accusations in the press. (…) We have witnessed a lame attack on the BNR,” Isarescu said.

He considers that the attacks on the BNR are irresponsible, have no justification, and affect Romania’s macroeconomic stability.

“Last year, the exchange rate was very stable. With its help, we kept the inflationary forecasts. (…) They went for BNR’s throat in what concerns the exchange rate, in an irresponsible manner. They asked for a fixed exchange rate; this can’t be,” Isarescu said.

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