The central bank will only reduce minimum mandatory reserve requirements imposed to commercial banks when it sees a significant liquidity slump on the interbank market.
"The volumes purged dropped from the equivalent of around 10bn euros, three years ago, to 5-6bn RON, which is less than 2bn euros at present. The NBR will gradually shift to the position of net creditor to the banking system. As this moment draws nearer, we will certainly cut down minimum reserves," says Mugur Isarescu, NBR governor.
Starting in June 2006, the NBR has been requiring banks to set up as minimum mandatory reserves 20% of RON sums they attract and 40% of foreign currency sums. Isarescu explained the purged volume comprised sums included in the Treasury's account opened at the NBR, which exceeded 6bn RON at the moment, and the NBR is temporarily in a position of creditor of commercial banks.
"In the following months, the Economy and Finance Ministry will make payments, and we will resume operations related to the purging of excess liquidity on the interbank market," the governor explains.
In late April, companies operated significant payments to the budget and as these overlapped payments of wages to employees and the start of a new period when banks set up minimum reserves, banking market liquidity shrank considerably.
Unlike last year, when some banks experienced a temporary RON shortage and borrowed aggressively, driving interest rates to 50%, now players have made early preparations. Interest rates have climbed slightly, but stopped at levels of 12-13% per annum, quite close to the monetary policy rate, at 9.5% per annum in late April.
On the other hand, the governor says the NBR will stick to a restrictive monetary policy for a longer period as it sees inflation exceed the interval agreed upon for a quite long period, which is also fuelling stro
