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Cronicile

Mugur Isarescu: “Ordinance weird thing” reduces monetary policy efficiency, which will not help Government

de Adrian N Ionescu , 14.1.2019

The National Bank of Romania (BNR) will convoke the National Committee for Macro-prudential Supervision, where the Ministry of Finance will be required to clarify the confusion of the Emergency Ordinance 114/2018 – the so-called “Teodorovici ordinance”.

According to the law and the Constitution, such an ordinance should have been discussed in the National Committee for Macro-prudential Supervision before its adoption. We will convoke the committee to seriously discuss the impact,” BNR Governor Mugur Isarescu (foto) said on Tuesday after the board of directors meeting.

Mugur Isarescu said that BNR was taken by surprise by this “weird thing” the same as everyone.

“We struggled to understand during the holidays the tax on greed, we were on holiday, we used this time for that, to make an impact study. It should have been made before, we were asked to make it now “- said the Governor.

Anti-inflationary monetary policy – affected: “that will not help the Government”

The measure will affect the flexibility and efficiency of the monetary policy, which will not help the Government. (…) With this flexibility we managed to decrease the inflation,” said Mugur Isarescu.

BNR Governor accused the “innovation” of connecting a tax on bank assets to ROBOR, which is a market interest rate indicator:

“The main element of dissatisfaction is that the tax was linked to ROBOR and there were no clear discussions with the industry,” Mugur Isarescu said.

In fact, “the money market went very well this year. What is this madness that some people have launched on the market …? If you look at the charts, ROBOR decrease came after the inflation started to decline.”

Accusations from Finance Minister – “A nonsense”

The BNR Governor accused the Minister of Finance’s insinuation according to which the central bank would put pressure on banks to maintain a certain level of interbank interest average rates (ROBOR).

“That’s nonsense, that I have put pressure…. We do not press. We have a leverage instrument, the monetary policy rate. (…) With our monetary policy, we succeeded what many did not think would happen: to bring inflation within the targeted range,” said Mugur Isarescu.

Inflation reached 3.54%, namely on the edge of the +/- 1% range compared to BNR’s monetary policy rate of 2.50%.

Also, Governor Isarescu indirectly criticized the idea of the Minister of Finance to include the banks’ provisions from BNR in the calculation of the tax on profit.

“In Romania the capital movement is free. The fact that when you go abroad you make a payment with a card issued by a Romanian bank is due to the fact that the banks comply with the international laws. If they would not comply with these laws, you were not able to make any card payments abroad,” the Governor said.

Other statements

  • The impact of the ordinance is of several billion euros. We cannot change the ordinance, but can make suggestions … It also took us by surprise.
  • The impact was calculated in a hurry, contrary to the custom … We hoped to bring people down to earth.
  • Economic growth was brought close to the potential growth (as a result of the monetary policy, editor’s note) and we moved away from what we feared – an overheating of the economy.
  • Banks have to say that the profit in 2018 comes after a few years of losses and rather as a result of some provisions. (…) They have to explain what it is with this confusion. One day they have a profit, one day they do not.
  • We no longer want to talk on behalf of the banks. They are independent. BNR is not the ministry of banks.
  • They keep talking about a bank cartel on ROBOR. But have you ever heard of any cartel made by the buyer and the seller?
  • We will give our point of view in the National Committee for Macro-prudential Supervision. (…) We have read the ordinance on both sides, we know very well that this is an electoral year and I understand what a political constraint is.
  • We do not want to disturb more than we need an atmosphere that is anyway cloudy. (…) Give us a little time to talk with the initiators to see what they intended.
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