|
RRI newsletter subcription
(e-mail address):
|
 |
Archives:
|
|
| The National Bank of Romania and Faith in the National Currency 08/06/2011 |
| (2011-06-08) |
| Last updated: 2011-06-09 16:00 EET |
According to National Bank Governor Mugur Isarescu, a strengthening of Romania’s monetary policy in 2005 and 2006 did not benefit later price evolutions, as it led to unsustainable growth of the national currency and a boom in loans granted in foreign currencies. At a seminar on monetary policies, Isarescu discussed the negative effects of loans in foreign currencies and the National Bank’s inability to enforce its monetary policy in past years.
An upward trend of the exchange rate and a swelling foreign currency loan bubble have set a trap that many fell into, Isarescu added. He believes foreign currency loans were QUOTE “a ticking time bomb”. Isarescu explained that in 2005 and 2006, as the National Bank consolidated its monetary policy to reduce inflation, more and more speculative capital was drawn.
As a result, the national currency, leu grew. Another instrument the bank uses to keep inflation at bay is boosting key interest rates, which dictate the cost of loans in Romanian currency. In 2005 and 2006, foreign investors brought foreign currencies, which they converted into Romanian lei and placed into deposits. This again boosted the national currency. The population was also fonder of loans in foreign currencies at the time, as those in Romanian lei had higher interest rates.
According to the National Bank of Romania, the lei equivalent of a foreign currency loan balance grew 72 % between December 2005 and December 2006. It is only now that the effects of massive loans taken out during those years are felt. At the end of April 2011, overdue payments of over 30 days on loans in euros, US dollars and other currencies made up for more than 50 % of all unpaid debts.
The National Bank looks to fix this through a series of measures to limit the granting of loans in foreign currencies. These measures will affect those with incomes in Romanian lei. Inflation is a financial phenomenon with multiple ramifications, Isarescu said, adding that significant money supply growth means higher prices only in the long run.
On the other hand, the governor denies the idea that inflation grows because the National Bank is printing money, as there is no major increase in the national money supply. He explained that cash is only part of the country’s money supply, with the rest made up of electronic credit on cards, bank loans and government bonds. Isarescu also said that a country with lower inflation would have a higher money supply, but that the general perception is the opposite, considering the money circulation speed.
|
|
| |
WMA |
|
64kbps : |
1
2
3
|
|
|
128kbps : |
1
2
3
|
| |
MP3 |
|
|
64kbps : |
1
2
3
|
|
|
128kbps : |
1
2
3
|
| |
AAC+ |
|
|
48kbps : |
1
2
3
|
|
|
64kbps : |
1
2
3
|
 Historical mascot of
RRI |
| |
© 1999 - 2011 Copyright Radio Romania International |
|
2025-04-03
Print
Listen again