Romania's central lender could make use of swap operations to lend foreign currency to banksPublish date: 12-12-2008
Swap operations, by means of which Romania's Central Bank (BNR) could lend foreign currencies to banks on the short term, could represent a measure to support the banking system, in case it proves necessary, according to James Daniel Stewart, vicepresident at Raiffeisen Bank Romania.
Banks in Romania are not in need of a bailout plan for now, but rather of immediate measures to assure an appropriate level of liquidities on the market and to reestablish trust among lenders, in the context of the liquidities shortage on a global scale.
BNR should therefore make temporary liquidity injections, especially when commercial banks in Romania need to reduce their dependence on foreign financing.
Steven van Groningen, president of Raiffeisen Bank Romania, estimates the banking system is currently going through an adjustment phase. The ratio between credits and deposits currently stands at 130 percent, but there are banks that post even a larger gap between the collected and placed amounts.
Banks also discussed the possibility to constitute their minimum mandatory reserves depending on their assets instead of their deposits, so that the reserves can also consider the destination of the credits granted by lenders, according to Groningen.
The country's current account deficit, which stems from an excessive demand, should be adjusted by economic policies that cap consumption but leave investments unaffected.
The minimum mandatory reserves banks have to build each month currently represent 40 percent of the deposits in foreign currency and 18 percent of the passives in lei.
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