National Bank (NBR) governor declares himself in favour ofmaking loans cheaper, but rejects the solution demanded more andmore often by the business world, of an aggressive cut to theinterest rate on RON-denominated loans, even at the risk of asignificant exchange rate depreciation.
"This danger exists not only in Romania, but everywhere aroundthe world - the implementation of hasty solutions, like 'depreciatethe exchange rate and cheapen loans'. Don't get me wrong, I am infavour of making loans cheaper. We should think about why the costof lending is not declining, why banks keep offering depositinterest rates significantly above the NBR rate and above monetarypolicy rates. Two years ago the same people would explain to usthat the problem was the lack of liquidity and called on us to giveliquidity. Now, that there is liquidity on the market, they foundsomething else: that the exchange rate has not depreciated,"Is`rescu said.
He specified this amid claims that the depreciation of the exchangerate and the reduction of the NBR's monetary policy rate couldstimulate the economy, which has been on an unbroken downward trendfor over a year.
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