In the next five or six months, the Finance Ministry should mainly issue short-term government securities until inflation becomes more easily predictable, says NBR governor Mugur Isarescu.

"In several months, inflation trends will become more predictable, and interest rates will also become more predictable at that moment. On the other hand, we can see the cash surplus is concentrated in the hands of the banks that have already bought government securities," said Isarescu at the "Monetary policy: Trends and challenges" workshop organised by the central bank. Thus, only three banks have come to concentrate half of government securities on the market.

The head of the Financial Markets Department of BRD-SocGen, Claudiu Cercel, explained that given a low liquidity level and an expected credit increase, banks prefer keeping liquidity, especially as government securities can register slumps.

The NBR has recently recommended banks to buy government securities for them to be able to participate in refinancing operations as a liquidity drain is expected at the end of this month.

While underscoring one could not speak of a liquidity crisis in the system considering the high minimum compulsory reserves requirements the NBR imposes on commercial banks, Isarescu explained that the acquisition of government securities is the best response to temporary RON shortages.

Claudiu Cercel emphasised banks prefer releasing loans in euros as they can more easily refinance in this currency from their shareholders, while refinancing operations on the domestic market are more difficult. Banks' balance sheets show the population tends to make short-term savings, while loans are contracted on much longer periods, thus generating an imbalance in terms of maturity terms.

At the same time, the swap euro-RON market, which could supply RON liquidity