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ECB: The biggest issue on Romania's real economic convergence is the low per-capita income on average
The low per-capita income on average represents the biggest issue regarding Romania's real convergence in view of joining the Eurozone (EZ), however, it's not a a formal criterion for euro accession, experts with the European Central Bank (ECB) believe.
"The biggest issue on real economic convergence is the low per-capita income on average, but this isn't a formal criterion for euro accession," the quoted source mentions.
Representatives of the international financial institution told AGERPRES that the Convergence Report on 2018 show that Romania continue to face several economic and structural issues when it comes to the question of convergence. When the Report was issued in 2018, the deficit and debt data for 2017, and the inflation of spring 2018 was in line with the convergence criteria required to access the European exchange rate mechanism II (ERM II).
"But fluctuation of inflation rates was high over the last ten years. There is a need for measures aimed at improving the institutional and business environment, boosting investment and competition in product markets, reducing sizeable skill mismatches and shortages, and enhancing both the quality and efficiency of the public administration and the judicial system. Significant efforts should also be made to improve Romania's weak absorption of EU funds," the bank representatives argued.
According to them, in order to boos confidence in the financial system, the national competent authorities should continue to improve their supervisory practices, among other things, by following the applicable recommendations from the relevant international and European bodies, but also by collaborating closely with other national supervisors of EU member states within the supervisory colleges.
'Romanian law does not comply with all the requirements for central bank independence, the monetary financing prohibition and legal integration into the Eurosystem', the report says.
When responding to whether it's possible for Romania to enter ERM II in 2022 and then in the EZ in 2024, the ECB representatives argued that this would first depend on a formal request by the Romanian side that would be assessed by the European Commission and the European Central Bank, and discussed with the Eurogroup and the other ERM II members.
"Bulgaria in 2018 and Croatia this year have started the preparations for ERM II. Since 2014 all members of the euro area also have to be members of the banking union, which means that the major banks are directly supervised by the ECB's Banking Supervision. It was agreed in the Eurogroup that because of this provision future euro area members should enter a 'close cooperation' with the banking union as foreseen in the SSM regulation. This already requires an Asset Quality Review and stress testing of the major banks," ECB representatives said.