Central Bank Bound To Lose Popularity Once Economy Recovers

04.20.2011 By Florentina Dragu

Romania's central bank will resume acting as a brake on potential economic overheating once the economy recovers, deputy governor Bogdan Olteanu said Wednesday.

Romania's central bank will resume acting as a brake on potential economic overheating once the economy recovers, deputy governor Bogdan Olteanu said Wednesday.

"It's a time when central banks become unpopular. We are essentially anticyclic and therefore, once the economy starts to recover, we resume our role of a brake," Olteanu told a seminar organized by financial daily Ziarul Financiar.

He said the central bank is currently discussing a series of measures meant to regulate private lending in foreign currency.

"Foreign currency loans are already treated differently from the ones in national currency and there are talks at European Union level which could materialize into a new regulation," Olteanu said.

He added the central bank has implemented restrictive measures before and with positive effects, as the local financial system remained stable throughout the crisis and the lenders didn't have to ask for bailout from the state.

Regarding the private lending market, Olteanu said Romanian companies should try to adjust to the existing offers instead of pressing for more relaxed terms.

"As to the much-criticized change in bank loan terms, not only do I admit the banks' procyclic nature, but I even say that this is a natural thing. The desirable evolution would be for the firms to adjust to the banks' terms rather than for the banks to relax their terms," he said.