Interview by Dr. Adrian Leonard Mociulschi
Financial headlines often focus on inflation, deficits, and credit ratings. Yet the health of an economy ultimately depends on something less tangible than data alone: confidence. While Fitch Ratings’ decision to maintain Romania’s investment-grade status has reassured markets, questions about purchasing power, financial resilience, and long-term economic stability remain at the center of public debate.
Professor Dr. Marian Siminică, Executive Director of Romania’s Institute for Financial Studies (ISF), a Bucharest-based institution specializing in financial education, research, and professional training, discusses the impact of inflation on consumers, the importance of financial resilience in an uncertain economic environment, and why confidence remains essential to sustainable economic growth.
Adrian Leonard Mociulschi: Inflation affects not only prices but also the real value of income and savings.
From an economic perspective, how does inflation alter purchasing power, and why is it often perceived by households as a decline in living standards even when nominal incomes are rising?
Professor Dr. Siminică: Inflation is one of the most common economic phenomena and affects societies around the world. It is characterized by a broad and sustained rise in the prices of goods and services, which gradually reduces the purchasing power of money. In other words, the same amount of money can buy fewer goods and services over time. As a result, even when incomes increase, if wage growth fails to keep pace with inflation, people become less affluent in real terms because their earnings no longer stretch as far as they once did.
To better understand the effect of inflation on purchasing power, we can compare it to the effect of heat on an ice cube. The higher the temperature, the faster the ice melts. Likewise, inflation gradually “melts” the value of money. The same amount of money will buy fewer goods and services than it did before.
We often see news reports announcing that inflation is declining, and many people expect prices to start falling. It is important to understand that a decline in inflation does not mean a decline in prices, but only a slowdown in the rate at which prices increase. For example, if inflation was 10% last year and 7% this year, prices are still rising, albeit more slowly than they did the year before. The pressure on purchasing power remains, but it is less intense.
Inflation is a natural component of a modern economy as long as it remains low and manageable. However, when it rises rapidly, it affects living standards, erodes household savings, and makes financial planning more difficult for both families and businesses. For this reason, preserving the real value of savings requires a disciplined approach to both saving and investing over time.
Adrian Leonard Mociulschi: Professor, if inflation steadily erodes the value of money, preserving purchasing power becomes a long-term challenge for households around the world. Beyond income and consumption, what financial habits and decisions are most effective in safeguarding savings over time?
More broadly, how can financial education contribute to lasting financial resilience in an increasingly uncertain economic environment?
Professor Dr. Siminică: In the short term, there are limited ways to fully offset the effects of inflation. When prices rise rapidly, purchasing power generally comes under pressure. Over the long term, however, the impact of inflation can be mitigated through consistent saving and well-structured investment strategies tailored to individual risk tolerance and financial objectives. Historical evidence suggests that asset classes such as equities and mutual funds have often delivered returns above the inflation rate over extended periods.
One of the most important financial habits is maintaining a clear overview of income and expenses. Understanding how resources are earned, spent, and saved is the foundation of sound financial decision-making. Without active financial management, personal finances are often driven by circumstances rather than deliberate choices.
Financial education begins with understanding income, expenses, and financial goals. Whether managed through a notebook, a spreadsheet, or a mobile application, a budget is most effective when it is monitored consistently. This discipline makes it easier to identify unnecessary spending, allocate resources more efficiently, and make informed financial decisions. A simple guiding principle is to prioritize saving before consumption.
Savings should be managed in a way that helps preserve their value over time, particularly in an inflationary environment. Once an emergency fund covering three to six months of living expenses has been established, surplus capital can be allocated to investments with the potential to generate returns above the inflation rate. Asset classes such as equities, bonds, and mutual funds may offer such opportunities, although they also involve varying degrees of risk. For this reason, investment decisions should be aligned with individual financial objectives, time horizons, and risk tolerance.
Adrian Leonard Mociulschi: We have discussed inflation, savings, and the importance of financial discipline in an uncertain economic environment. Throughout our conversation, one idea has emerged repeatedly: the value of knowledge and informed decision-making.
In that context, the Institute for Financial Studies (ISF), one of Romania’s leading institutions for financial education and professional development, is running the FINEXPERT program. What are its main objectives, and who stands to benefit from it?
Professor Dr. Siminică: FINEXPERT is one of the most important initiatives undertaken by the Institute for Financial Studies in the area of professional skills development. Its main objective is to support Romania’s financial sector through information, counseling, and training programs adapted to new technological requirements and labor market demands.
The project is aimed at a target group of 608 employees and managers from the financial sector in the Bucharest-Ilfov region, from both the public and private sectors. Participants benefit from 17 training programs covering topical areas such as cybersecurity, ESG, anti-money laundering, risk management, behavioral finance, and investment funds.
In essence, FINEXPERT is an investment in the future of financial professions. Our goal is to increase professionals’ ability to adapt to economic and digital transformation while improving the quality of financial services provided to citizens and businesses. This is the first step in a broader strategy through which we aim to support the professional development of at least 3,500 financial sector specialists by 2030.
Adrian Leonard Mociulschi: Professor, thank you for your time and insights.
Beyond the Data
Behind every inflation rate, budget deficit, or credit rating lies a more fundamental question: confidence. Markets can measure risk, but economies grow, innovation flourishes, and societies prosper only when people trust enough to save, invest, plan, and build for the future.
In the end, sustainable prosperity depends not only on capital, institutions, or technology, but also on the financial knowledge that initiatives such as FINEXPERT seek to advance.
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