Accessibility links

Breaking News

Romania: Central Bank Heads For 'Total Independence'

Bucharest, 22 May 1997 (RFE/RL) -- The Romanian government forwarded this week to parliament its last legislative piece from the banking sector reform package -- the draft bill on rules governing operation of the central bank.

An RFE/RL correspondent in Bucharest reports that the cornerstone provision the draft bill refers to is the "independence" of the Romanian National Bank (BNR). This is a major shift from the previous so-called autonomous status of the bank, which was in fact subordinated to the government.

The present draft, meant to replace a 1991 law, states that the BNR has a total institutional, personal, functional and financial independence. A central bank official says that under this provision "no institution will be able to interfere with the BNR decisions" and there will be no more pressure from the government. He said the draft is in line with the European Union standards.

Adrian Vasilescu, chief of the BNR communications department, told RFE/RL that the legislative piece was drafted with outside support from the International Monetary Fund and the World Bank. He explained that the realities facing the Romanian banking sector have changed radically in the last years and his reform became necessary to conform with liberalisation of the economy.

The draft bill states that the fundamental objective of BNR is to maintain national currency stability, in order to assure price stability. Vasilescu told RFE/RL that BNR is authorized under the new bill to fully establish and run the monetary, FOREX, credit and payments policies and to control the correct functioning of all commercial banks established in Romania.

The central bank board will comprise nine members, to be approved by the parliament for a five-year term, but designated by the prime minister. The previous term was of eight years. Some Romanian analysts maintaining that the term was shortened in order to give the possibility to the centre-right coalition in power to replace this fall the present BNR governor, Mugur Isarescu, whose mandate expires, under the older law, in the last quarter of 1998. Analysts also say this piece of legislation will gain easy approval in parliament.

The present draft is the fourth banking reform piece forwarded to the parliament in the last six weeks. One of the other pieces was the state banks' privatisation law, which recently gained final presidential approval. That bill will free three-quarters of the Romanian banking system from state controls.

The first state bank to be privatised was designated to be the Romanian Bank for Development. The other leading state banks to become private are the Romanian Commercial Bank, BANCOREX, the Agricultural Bank and Banc Post. The former regime of the ex-communist president Ion Iliescu resisted surrendering control of the country's state-owned banks, despite pressure from international organisations, including the World Bank and the International Monetary Fund.