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| THE BANKING POLICY AND THE CRISIS 24/10/2008 |
| (2008-10-24) |
| Last updated: 2008-10-27 15:31 EET |
The central bank governor Mugur Isarescu has once again stepped into the spotlight to warn that he may have the legislation amended, to the effect that bankers who jeopardise bank safety might be replaced. He explained that the crediting market is blocked because of three leading banks operating in Romania, which keep inter-banking rates high, because they are backed by speculators having incurred substantial losses further to the failed attack against Romania’s national currency. President of the Romanian Banking Association Radu Ghetea says the situation may end soon:
“It’s about some speculative moves made by some operators, some of them from abroad. They expected a certain development, and it didn’t work out… they made certain speculative moves, and it didn’t work out. So they had to close operations in all accounts, which is why they offer very high interest rates in order to attract lei. The market didn’t have this amount of national currency, and the interest rates kept increasing. I believe things will calm down in the next few days.”
The National Consumer Protection Authority is also looking into the recent interest rate increases operated by commercial banks. The institution has drawn up a bill to support individual bank clients who choose to take legal action against such banks. The bill is scheduled to take effect on January 1st. Bank officials claim the increase of interest rates was primarily caused by the substantial increase in the cost of financial resources, triggered by the international cash shortage and by the new crediting norms enforced by the central bank. Furthermore, interests remain high in the inter-banking market because of the high foreign demand for Romanian currency, and the banks which use this indicator as a reference interest rate in loan contracts are tempted to pass these additional costs on to their customers.
On the other hand, the International Monetary Fund expects a significant slowdown in Romania’s economic growth next year, put at 4-5 per cent as against the record high 8-9 per cent estimated for 2008. According to the IMF senior representative in Bucharest, Juan Fernandez-Ansola, crediting will slow down and economic activities are certain to be affected. For the time being, these are mere forecasts. As far as facts are concerned, one was made public by the National Institute of Statistics. It announced that Romania’s gross domestic product for the first half of this year saw an 8.8 per cent increase, the highest since the communist regime was brought down in 1989.
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