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Romanian Pres Says Ctrl Bk Must Be Predictable And Gradually Reduce Its Reserves

Romanian President Traian Basescu said Sunday the central bank has reserves of nearly EUR12 billion and owns in lei the equivalent of EUR6 billion, which belong to commercial banks, adding the central bank must keep only 2% in its reserves to allow Romani’s accession to the Eurozone in 2014.
Romanian Pres Says Ctrl Bk Must Be Predictable And Gradually Reduce Its Reserves
14 iun. 2009, 14:57, English

Basescu said the central bank must be predictable, arguing it must hold talks with commercial banks on reducing its reserves.

He added the central bank must gradually release this money and stressed that releasing sums from the central bank’s reserves is “sheer philosophy,” because an eventual error in releasing sums that are either too high or too low can seriously affect the exchange rate and trigger inflation.

Central bank deputy governor Eugen Dijmarescu said Thursday, June 11, that the National Bank of Romania does not rule out cutting the minimum required reserve ratio and the key monetary policy rate, if the government supports these decisions.

The central bank’s governor Mugur Isarescu said end May the key monetary policy rate would be cut gradually in line with the inflation’s descending trend, without sharp adjustments.

Isarescu previously said the central bank would be "generous" in reducing the minimum requirements, based on lending needs and on the agreement with the International Monetary Fund.

Romania and the IMF closed in May a EUR12.95 billion two-year stand-by arrangement, as part of a EUR19.95 billion financial support package that also includes funds from the European Commission, the World Bank, and the European Bank for Reconstruction and Development.