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BNR’s Isarescu: Today’s legislative innovations are extremely dangerous

BNR does not intend to discourage credit, we are looking for healthy, balanced way for it, Governor Isarescu says

The National Bank of Romania (BNR) has no intention to discourage credit, but it is interested in healthy, balanced and sustainable credit on components, Governor Mugur Isarescu said on Tuesday at the ‘Summer Banking Academy’.

“Many comments have been issued by the media about our intentions. I have to say it plainly, we do not intend to discourage credit. On the contrary, we want to encourage it. We are looking for ways and expect from you debates on encouraging the credit. Indeed, we are interested in healthy, sustainable and balanced credit on components, by disintermediation, by reducing the credit as we have seen it during the past two years, even three years, because part of the credit was unsustainable. It went to directions that could not have continued. We want it to last for the years to come, to balance it by components, and to stimulate economic growth. Actually it should become one of the main drivers of economic growth,” Mugur Isarescu said, capital.ro informs.

Isarescu said the degree of financial intermediation has placed Romania on the lowest level among the EU Member States, and it is decreasing, it was 27% of the GDP at the end of 2017, as compared to 40% reached in 2011. On the other hand, credit to the private sector, of 5% in 2017 has grown to 6% during January-April this year.

“The development coming out of the figures suggests the common issue is the fast economic growth based on fiscal stimuli and revenue stimulation, not on banking credit, so this effect is relevant. This turns us to the main discussion. The fiscal stimuli cannot be used indefinitely and then, in order to register lasting economic growth, we need to find out what these fiscal stimuli will be replaced with. It may be credit, healthy, balanced, sustainable credit, it can be an important driver,” the BNR Governor said.

About Victor Lupu