By Andra Beltz
The National Bank of Romania's report on financial stability pinpoints five risks, of which three moderated but rising risks, one of them being the straining of domestic macroeconomic balances through slippages and uncertainties in the budget fiscal policy, Deputy Governor of BNR Liviu Voinea stated.
'From the date of the previous report, May 2017, financial stability has kept strong but we notice the maintenance and accumulation of certain vulnerabilities, especially as regards tensions being accrued along the line of risk premium increase for emerging economies, the straining of domestic macro-economic balances through slippages and uncertainties in the budget fiscal policy and the growth of the population's indebtedness, the risks being amplified through the correlation of these factors. At the level macroeconomic fundamentals we notice a series of favourable indicators. Romania's main leverage is the low public debt stock, 37.4 pct of the GDP [Gross Domestic Product - ed.n.] together with the decline of the refinancing risk due, first and foremost, to the expansion of the public risk average maturity, from 3.8 years to 8.1 years in foreign currency or from 1.6 to 3.5 years in lei, for a six-year only interval,' Liviu Voinea told a conference presenting the Financial Stability Report.
He specified that starting with this edition of the report presentation, the Board of BNR has decided to narrow the number of risks introduced to a maximum of five for two reasons, namely the possibility to focus the analysis and draw attention to the most important messages, as well as the alignment to the good international practices of the central banks which release financial stability reports, especially the European Central Bank. Deputy Governor Voinea mentioned that this is the reason why complete comparisons with the risk maps of the previous reports cannot be drawn.
'We haven't identified any severe systemic risk yet, but a combination of the identified risks can lead to a severe risk in unfavourable market conditions. The main risks for financial stability are reflected on this risk map. A high systemic risk, specifically the weakening of the investors' confidence in emerging economies, three moderate systemic risks, but all three on the rise and particularly the straining of domestic macroeconomic balances, the growth of the population's indebtedness, both through the banks' channel and the NBFIs [non-banking financial institutions - ed.n.] and the low payment discipline in the economy, the acceleration of real estate prices,' Liviu Voinea added.