Romanian Banks Stop Interbank Lending On Market Rumors

The Romanian banks have stopped interbank lending due to market rumors, but the liquidity was ensured from other sources, the head of the National Bank of Romania supervision department Nicolae Cinteza said Wednesday.

"Following rumors, the banks started to close one another's exposure limits," Cinteza said.

Central bank governor Mugur Isarescu said Monday that there is a paradox on the money market where there is an excess liquidity, while interest rates far exceed the 10.25% key monetary policy rate.

Cinteza said several lenders have attracted financing from their mother-banks.

Also Wednesday, Cinteza said deposits in the Romanian banking system are safe, as no bank is confronting liquidity problems for the moment.

Cinteza said that bank withdrawals based on market rumors would be a mistake as the central bank is committed to support the banks.

On Tuesday, the EU finance ministers agreed to increase the minimum deposit guarantee to 50,000 euros, from 20,000 euros in order to increase depositors trust in banks.

Romanian Finance Ministry representatives told Mediafax that European ministers' decision would become mandatory only after it gets the European Council approval.

Mediafax