The hard ROL, scheduled to make an entrance on the market on 1 July 2005 is starting to become a pain in the neck for commercial bankers. A very high demand for new bills, the need to replace all computer programmes, feeding the pay offices, operational risks in the dealings with clients, installing new equipment that counts and sorts metallic coins, the change of the international code of the ROL, the detailing of the procedures for accounting rounding. These are some of the problems mentioned by bankers as caused by the striking of four zeroes off the domestic currency's tail.
The commercial banks unanimously feel that the 18-month period allotted by the re-denomination law for the circulation of the old ROL should be shortened.
Other practical problems: how will a share listed at 12,345 ROL be recorded in accounting, how will be change given back to the client for a 1 million ROL bill they use to pay a 798,211 ROL instalment, how will the exchange rates be displayed and what will be the reaction of the clients that closed deposit/loan contracts in the old ROL and find themselves having to deal with the new ROL, and what will people do at the pay offices once they have a hodgepodge of old and new bills in their wallets?
"I don't think there's going to be a problem with the pocket hodgepodge. What will people prefer, that is a very difficult question. I think we must not exaggerate, as neither do I want to leave the impression that the old bills will lose their buying power," said NBR Governor Mugur Isarescu.
The central bank does not have too many exact answers. It expects a list of all comments and possible problems from the commercial banks until November 26.
NBR has four major arguments to support re-denomination. "It is necessary to mark the end of an inflationary cycle and the start of a period of stability," Mugur Isarescu says. There is also displaying prices at nominal levels used throughout the entire Europe, simplifying the transition to the euro at a later time by the similar sizes of the new bills, making the value indices easier to understand again.
The first to be withdrawn from circulation will be the current 10,000 and 50,000 ROL bills, as well as the metallic coins. "The other bills are of a better quality and can stay in circulation for longer," Isarescu says.
"We are in favour of a shorter implementation time," BRD vice-president Petre Bunescu said.
"We are sharing the fears about a possible inflationary increase. At the same time, some people who hold old ROL might go for foreign currency as of 2005 in case they do not find new ROL," Bunescu added.
"There is the risk of the inflationary effect becoming more serious. The problem remains next year, when the inflation goes down and interests are cut, with the average person that does not find new ROL and will direct their old money to something else," Bunescu said.
At the same time, the officials of the lending institutions raise the issue of the credibility of the banking system being hurt, in case the population does not find new bills at the banks' pay offices when they ask for an exchange. razvan.voican@zf.ro
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