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Isarescu: One of Romania’s big problems is political debate

The way in which political debate and pro-cyclic government policies develop represent one of Romania’s big problems, said the governor of the National Bank of Romania, Mugur Isarescu at a seminar organized by BNR.Representatives of the central bank criticized the fiscal and salary policies used since 2008, which led to the deterioration of the budget structure and the excessive deficit increase, which forced government policies to remain pro-cyclic even after the beginning of the financial crisis. In fact the BNR governor said that in order to have an anti-cyclic fiscal policy Romania’s budget deficit should be 12% of GDP.He added that policies about structural reforms were postponed after the EU admission, especially in the perspective of election years 2008-2009.In his Thursday speech at BNR Isarescu defended the banks , showing they cannot be forced to grant credits in conditions of risk and uncertainty, thus risking the clients’ money. He says that most debtors forget that banks do not use their own money, but their clients’.
Central bank's policies must be cautious
The central bank's policies must be cautious, due to the experience and to the market conditions, Governor of the National Bank of Romania (BNR) Mugur Isarescu told a seminar on financial intermediation on Thursday. 'The flag is passed from the competition, from the market share fight, but under production conditions. The policies of the central bank must be cautious too, due to the experience and to the market conditions. The dynamics is not sustainable and deep-going processes occur within banks with more emphasis on the part related to caution,' said Isarescu. At the same time, the BNR Governor underlined that the National Bank may be anti-cyclic through the measures it takes, given that commercial banks are pro-cyclic.

'Excessive indebtedness is discouraged. Banks are pro-cyclic, we cannot say they are anti-cyclic. We can be. There is nothing written about us needing to have profit. Nor that we must have losses, it is true,' said Mugur Isarescu. Likewise, the BNR official added that Romania 'would have entered in the blasphemy book' if it had restricted the exchange market in 2008. 'We are completely bound to what happens in the world. We are now more open than Germany. If we had restricted the exchange market in 2008, we would have entered the book of blasphemy, in addition to our having joined the EU unprepared,' said Isarescu, quoted by Agerpres.

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