"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, is limited. On the other hand, RON liquidity has a high volatility because of NBR interventions and the difficulty in anticipating State Treasury liquidity.
"In late April we may again witness an interest rate hike and a liquidity shortage as it happened last year," said Cercel.
Stefan Nanu, head of the Treasury Department of the Finance Ministry, announced the state would take to an active management of liquidity in the following months, namely it would place resources with commercial banks in the periods it registers surpluses. He added the Treasury would analyse the common goals to be able to constantly place on the market the surplus sums in the Treasury's account. Nanu explained that the Treasury usually registered surpluses at the beginning and at the end of each month, while spending peak was reached between 7 and 17th of every month.
Nanu said he believed we might witness again the situation in April 2007, when interest rates posted considerable increases.
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