Premium
Ordinance 114/2018, adopted without a previous consultation of the National Bank of Romania (BNR) represented a severe risk to the financial stability by damaging the mechanism of transmitting the monetary policy, on Wednesday asserted the central bank's governor Mugur Isarescu at the presentation conference of the Report on financial stability.
"A few words about the second systemic risk presented in the Report: it is about the legislative risk, the legislative instability. Ordinance 114/2018 [Government Emergency Ordinance, OUG, ed. n.] adopted without the previous consultation of the BNR, without negotiations, talks, consultations with the banking industry and in particular with the European Central Bank, as required by the functioning Treaty of the European Union, represented a severe risk to the financial stability by affecting the monetary policy transmission mechanism and by the significant material impact upon the banking system," Mugur Isarescu stated.
The central bank's head specified that the BNR got involved in amending this Ordinance within the National Committee of Macroprudential Surveillance (CNSM), the legal framework Romania has to discuss these matters. The bank had a clear three-point mandate: to have the connection between the tax and the ROBOR (Romanian Interbank Offered Rate, ed. n.) canceled, to have the tax's level diminished and to have the taxation base reduced. The governor said that all were aimed at slashing the systemic risk, but the result that has been reached through Ordinance 19/2019 marked the attaining of the goals, yet it is an emergency solution.
"There results the high legislative risk and we mention not only that OUG 114 could occur the way it did, overnight and ahead of the winter holidays, but also from the uncertain, unpredictable character of the other recent legislative changes, from the absence of the impact study in all of the cases and out of the lack of consultation with the interested sides. The series of legislative initiatives that were already declared unconstitutional fully contribute to shaping this risk the Report brings to mind," Mugur Isarescu stressed.
The BNR head mentioned that the financial stability is a public asset permanently emphasised as such by the central bank.
At the end of 2018, the Government set through OUG 114/2018 the taxation of the banks' financial assets in case the level of the ROBOR is higher than 2 percent, a contribution initially called by authorities "the tax on greed". Subsequently, in May 2019 OUG 19/2019 came into force by modifying the way the interest rate for the leu-denominated loans with variable interest is calculated. So, the reference index for the consumers' credits (IRCC), regulated by OUG 19/2019 is 2.36 percent per year, being calculated as an arithmetic average of the daily interest rates of the interbank transactions of Q4, 2018, according to the data announced by the BNR.
