BNR releases €1.2 bln from the banks' reserves

The National Bank of Romania (BNR) decided yesterday to lower the cash reserve ratio (CRR) on foreign currency-denominated liabilities to 25 percent from 30 percent.

BNR's Board of Directors met in a special session yesterday to analyze the budgetary, monetary and financial implications of the postponement of the bail-out tranches scheduled for the fourth quarter as part of a multilateral agreement between Romania and several international financial institutions. Practically speaking, the central bank is releasing €1-1.2 billion from the reserves set aside by commercial banks, so that lenders may have liquidity and finance gaps in the state budget.

"I was not expecting this decision, so soon. But I must say it is not devoid of logic. Some stabilization was felt. The decision will bring more liquidity and boost the growth of the economy," Alexandre Vincent, analyst for Emerging Europe at BNP Paribas in Paris, told Business Standard.

Local bank analysts, however, said they were expecting such a decision. "Even if the tranche from the IMF [International Monetary Fund] had entered Romania's accounts, we still needed money. This is necessary for financing the budget deficit. As we all know, a new 'club loan' could be created, and I believe that the interest rate will be similar to that of the previous club loan, of 5.25 percent," Nicolaie-Alexandru Chidesciuc, Senior Economist of ING Bank Romania, told Business Standard.

The Chief Economist of Banca Comerciala Romana (BCR), Lucian Anghel, said that this is a "relaxation of the monetary policy."

standard.money.ro