RSS
The vulnerabilities of the stability of the Romanian financial system: the over indebtedness of the population and the health of the companies
The National Committee regarding the Supervision of the Macroprudence (CNSM) identified, in the last meeting, two vulnerabilities on the stability of the Romanian financial system, which refer to the health of the non-financial companies in Romania and the indebtedness of the population
The first vulnerability is ‘ the persistence of the negative results for a numerous group of companies, the poor quality of the own capitals and the high number of companies with own capital under the regulated level or inactive’.
The second vulnerability is the increase of the population indebtedness which can have negative effects on the financial system, as well as on the future economic increase. ‘ At present,the degree of indebtedness increased considerably, a third of the debtors who have a loan over the last year with, on average, a degree of indebtedness of over 55 %’ shows a press release sent on Thursday by CNSM.
As a result of identifying the structural vulnerabilities with regard to the health of the non-financial companies in Romania, vulnerabilities which have important negative implications on the stability of the Romanian financial system, namely the persistence of the negative results on a numerous group of companies, the poor quality of the own capitals and the high number of companies with own capital under the regulated limit or inactive, the National Committee for Macroprudential Supervision adopted the recommendation no.R/6/2017. With it, it is recommended that the government, through the ministry of public finances, together with the National Bank set up a working group which should analyse the financial health of the companies and identify solutions so that, in the public sector and the private one budgetary constraints of the companies become firm.
Another vulnerability at the address of the financial stability refers to the increase of the population debts, which could have important negative effects, both on the financial system and the future economic growth. At present, the degree of indebtedness increased considerably, a third of the debtors who contracted a loan over the last year having, on average, a degree of indebtedness of over 55%. In order to finalise the analysis which should support the decisions of CNSM regarding the reduction of risks at the address of the financial stability as a result of the increase of the population indebtedness, CNSM recommended the set up of a working group with representatives of the ministry of public finances and the National Bank of Romania.
The next CNSM meeting is scheduled to take place on 11 December 2017.
The National Committee for the Macroprudential Supervision was set up on the basis of the law no.12/2017 regarding the macroprudential supervision of the national financial system, thus making sure that the recommendation of the European Committee for Systemic Risk (CERS) no.3/2011 regarding the macroprudential mandate of the national authority is implemented. CNSM is made up of representatives of the national Bank of Romania, the authority for the financial supervision and the government. The CNSM mission is to insure the coordination in the domain of macroprudential supervision of the national financial system, through the development of the macroprudential policy and the adequate instruments for putting it to effect.