NBR comes out of the closet: I am not independent, deal with it!

Romanian Parliament ,majority socialist (irrespective of the party), has voted a new board for the National Bank of Romania. For the first time (except for Mugur Isarescu who qualified on the job and was confirmed for a fifth consecutive term) no one of the board members (nine of them) has had any experience in banking or central banking. There is not a single one in the board that has had an opinion, forget about papers or books, about monetary policy, inflation targeting etc. A pure political board. NBR has never been an independent central bank and now it was time to show this to the entire world. At least it scores some points on transparency and courage.

The appointment of people with no qualification for the job is strange considering that IMF, EC, the EU etc made a big deal few months back appointments to the Financial Services Authority. In that case the IMF and the EC pressed the government to lower the number of the members and demanded that those have at least 10 years of experience related to their activity: regulating the financial markets except banking.

There is a good side to all this madness. Monetary policy in Romania was terrible. It was procyclical, it lacked transparency, and it at times it seemed chaotic although the NBR preferred to call it unconventional. The main risk from such a political board would be the unconditional support of government inflationary policies. But the NBR was already doing that. It fueled the boom in 2005-2008 and hid the disaster for a year in 2009 (presidential elections and new board members).

In other words the Romanian monetary policy cannot get worse. The markets it controls are already the smallest and least competitive in the EU. At least it had the courage to come out of the closet and shout: I am not independent, deal with it.



6 thoughts on “NBR comes out of the closet: I am not independent, deal with it!

  1. I suppose we have to deal with it, like it or not. I’m slighly allarmed as this is by far not a single matter we are confronted with, on a take it or leave it basis. We have recently voted (at least some of us have) our representatives in the EP, without a clou on what they’re up to. Not only that our winners (or loosers) in these elections had not even one projection of what this country could be in an EU context, the voters seemed not interested in the matter either. To say nothing of the upcoming presidential elections, which again are to present us with a battle of candidates and not of political, or any ideas. I think this nation is making a big mistake, taking popularity for democracy.

  2. Nicolae Danila, Cristian Popa and Napoleon Pop were the right wing in NBR and… I am Mother Teresa.

    Only at the slightest rumor that NBR might behave just like Polish and Hungarian Central Banks, the rightist scream against it.
    The banking system is sitting nicely on the back of those misinformed during the bubble years, and this financial dynamics seems to change. The incestuous relationship between NBR and banking cartel was fine and now our Central Bank has lost its independence… gained in 1877.

    … bleah.

    P.S. Moise Guran is fully worried that the 90s are back, and the banking system is shaking. “Our” banking system is in big danger without Nicolae Danila, Cristian Popa and Napoleon Pop… OMG!!!

    P.P.S. What about the huge inflation predicted in 2012 after the “left plague” came into force? 😀 (funny)

    1. Well, I did not say that NBR was not dominated by politics until now. All I am saying is that now is not shy about showing its servitude to the political parties (not even government).

  3. Foarte trist ca se intampla toate astea, insa speranta ramane in oameni precum dumneavoastra dl Florin. E foarte bine ca va scrieti parerile si luptati pentru ele!

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