Isarescu Says Bank Tax Is an Attack on Central Bank Independence

Romanian central bank governor Mugur Isarescu said the tax on bank assets is an attack on the independence of the institution, as it hinders monetary policy.

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“Government emergency decree 114/2018 is a failure to say the least, it's a tax on monetary policy. (...) In case of an attack on the leu, if we raise interests, we kill banks,” Isarescu told members of the Senate's budget and finance committees at a hearing Tuesday.

Central bank first deputy governor Florin Georgescu said at the same hearing Tuesday the country's committee for macro-prudential supervision is working to separate the bank tax from the level of interbank interest rates.

In late December last year, the government introduced a tax on bank assets conditional on interbank interest rates. Banks will pay a progressive tax of 0.1%-0.5% of assets if money market rates exceed 2%.

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