The National Bank of Romania considers the average interest rates of time deposits and new loans are still distorted compared with the key interest, so that the monetary policy relaxation pursues their adjustment and lending revival, according to the statement made public after the meeting of the bank's Board of Governors. The NBR on Tuesday decided to cut its key rate by 0.5% to 9% per annum and reduce minimum compulsory reserves by 5%, to 35% of banks' liabilities, and by 3% for RON, to 15%. "NBR's Board considers these decisions will help secure an adequate level of liquidity and the gradual return of commercial banks' interest rates, both for deposits and loans, to the natural functional position against the monetary policy interest rate," reads the NBR statement. At present, banks are placing almost all their cash in government securities, as the Finance Ministry is borrowing aggressively, paying interests of around 11% per year and private sector lending contracted further. Analysts consider banks will relax lending conditions, but not quite rapidly, with the credit risk staying at considerable levels.