Romanian Ctrl Bk To Become Creditor For Banking Sys

"The central bank is no longer such an important debtor for the banking system, and it might even become a creditor for the system soon, while central bank interest rates would no longer be so high," Radulescu said.

He indicated that the central bank’s function as creditor for other banks would spawn immediate and substantial effects regarding liquidity in the banking system and the cost for that liquidity.

Asked when the central bank would become creditor for the banking system, deputy governor Eugen Dijmarescu said there is no exact date set in this respect, but he hopes this will happen soon.

Dijmarescu added banks might resort to the central bank resource when they are facing a liquidity deficit, coupled with situations that require collateral, such as state bonds and central bank deposit certificates, which currently exist only on paper, and not on the market.

"State bonds are, however, insufficient and unequally distributed in the banking system, but I believe they will register and increase in the portfolios of banks," Dijmarescu said.

On the other hand, Dijmarescu said central banks should only become creditors as a last resort and for institutions other than classic credit institutions, a measure already taken by the Federal Reserve Fund.

"Central banks should not exclude this possibility," Dijmarescu mentioned.