Romanian c-bank might lower required reserve ratio next year, governor says

By bne IntelliNews December 13, 2013

Romania’s central bank wants to cut the required reserve ratios for both local and foreign currency liabilities next year, governor Mugur Isarescu told a news conference, quoted by Bursa daily.

The statement was made in the context of explaining that banks hold sufficient resources to finance the real sector – and will have even more in the future. At this moment, banks have an excess of EUR 2bn that they hold on the money market [instead of extending loans to the real sector], Isarescu said.

The required reserve ratio for forex liabilities was cut from 40% before the 2008 credit crunch to 20% and there is no reason to not cut it more, Isarescu argued. The logic of high requirements before the recession was to prevent excessive forex lending, he explained.

There are some EUR 6bn in the compulsory reserves held by commercial banks at the central bank. The required reserve ratio for local currency liabilities, of 15%, should also be lowered, Isarescu stated.

 

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