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BNR: the risk of quick deterioration of the trust of investors in emerging economies in the top of those identified by banks

The risk of quick deterioration of the trust of investors in emerging economies in the context of foreign evolutions, as well as the uncertain and unpredictable legislative framework in the domain banking and financial with implications on the solvency of the banking sector,are at the top of the first risks with systemic potential at the address of the domestic banking sector,  shows the survey of the BNR regarding systemic risks.

‘According to the survey regarding systemic risks, the biggest loan institutins in Romania identified in the current exercise five high risks and four moderate ones. In line with the previous exercise (June 2018) the first three risks with systemic potential, high at the address of the domestic banking sector are still the same, but the order has changed. Thus, the first three risks, according to its importance, are the following:1.the risk of quick deterioration of the trust of investors in emerging economies in the context of foreign evolutions;2.the uncertain and unpredictable legislative framework in the domain of finances and banking with implications on the solvency of the banking sector ; 3.the risk of growth of the financing costs as a result of the increase of the interest rate and/or the depreciation of the national currency with negative effects on the capacity of payment of the debtors, especially of the populationa and the SMEs’, says the Survey on the systemic risks of September 2018.

According to the opinion of the lending institutions, the current level of the three risks is high and the possible negative effects that can appear are relatively difficult to manage.

According to BNR, under these conditions, the adequate combination of the mix of domestic policies, the macroeconomic balance in good order and the avoidance of the over-indebtedness are necessary so that Romania benefits from positive discrimination on the part of the investors in period of turbulence.

The following high systemic risk identified by the lending institutions is that associated to financial innovation and challenges at the address of cyber security. As compared to the previous exercise, this risk was evaluated as growing getting from the sixth position to the fourth, but the probability of apparition, the potential impact and the capacity of management  were kept relatively constant.

The risk associated to evolutions on the real estate market is high, but goes down from the fourth position to the fifth during the current exercise, the probability of apparition, the potential impact and the capacity of management are relatively constant.


BNR mentions that the systemic risk generated by the growth of real estate prices is at present of reduced intensity and going down, as there is a temperate evolution of the prices, as well as the slowing down of the activity of the real estate market over the latest period (the number of tradings was diminished, and the duration of sale of the residence increased).

The lending institutions considered the following systemic risks of medium importance: the risk of non-reimbursement of the loans by the non-governmental sector, the risk coming from the accelerated growth of population credits, the risk of intensification of the connection between the banking sector and the public sector and the risk of keeping a modest evolution of the lending activity of the sector of non-financial companies.

By comparison to this re-evaluation on the part of the domestic banks, BNR kept constantly this risk, in the Report on the financial stability, December 2018. The risk of non-reimbursement of the loans contracted by the non-governmental sector is kept as of high risk especially on the segment of the population. Taking into consideration the trend of normalization of the monetary policy at global level, the interest rates will be increased against the historical minimum obtained, placing pressure on the capacity of re-imbursement of the debtors.

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