Joseph Stiglitz: Romania has an edge over other states

Publish date: 22-05-2009
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Some countries did better than others during the current crisis, with Romania counting to the first category, said Professor Joseph Stiglitz on Thursday, while in Bucharest where he is to deliver an address on the impact of the economic crisis on South-East European countries, at the Central and South-East European Financial Forum organized by Forum Invest.

In the opinion of the winner of the Nobel Prize in economics, Romania was able to resort to regulations on reserve cutting, it had a robust demand before the crisis and a healthy set of banking regulations. Professor Stiglitz believes that the very fact that it is a small state (in comparison with the U.S. - Ed. note) integrated in such a large market like Europe (which however faces problems itself), is yet again an element that benefits our country.

Another asset that helped deflect the crisis from Romania to a certain extent is the exchange rate flexibility and the lower reliance on foreign banks than that of other countries which have no more banks left running on domestic capital.

As regards the IMF requirements, Professor Stiglitz says that they were in no case any tougher than the measures Romania should have self-imposed to get out of the crisis.

The advice the Nobel Prize winner has for the Romanian authorities is for them to try to cushion the effects of the crisis by using available money for the creation of new financial institutions with Romanian capital, that should preferably provide loans to SMEs which create jobs and boost economy.

In his turn, governor of the National Bank of Romania (BNR) Mugur Isarescu, also attending the forum, said that foreign-owned banks in Romania are practically Romanian banks running on foreign capital, because they stand under BNR regulation and supervision. In his opinion, if a parent bank had problems, 'contagion in Romania would not be financial, but would rather affect the institution's name and create panic.' Isarescu also said that, although price stability is the priority of BNR, financial stability has not been left aside, because it is a prerequisite for long-term price stability.


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