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Valentin Lazea: BNR will have to increase the interest rate further to prevent a migration to the euro

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Lei depositors are penalized by low interest rates, which is a reason why BNR will have to increase interest rates further to prevent a migration to the euro, the so-called Euroization of the economy, Valentin Lazea, chief economist at the national Bank of Romania (BNR), said recently at a specialized conference.

 

The BNR official said that the rate between loans and deposits is kept subunit both for the lei – 0.82 in April as well as for foreign currency – 0.51 in April.

 

In other words, there are fewer loans both in lei and in foreign currency than deposits in banks. What does it mean? It means that the banks have sufficient funds for lending,  but they do not find enough possibilities to place them – and this is happening as almost 40% of the Romanian companies are non-bankable – a story which has been lasting for 30 years – nobody wants to deal with it. What is 40% of the non-bankable companies? It means lower capital than 200 lei or negative capital. Lending could exist, but first you need to exist the capitalization of the companies’ Lazea said.

As regards lending, the first five months of 2022, despite the war in Ukraine, lending has increased in nominal terms, both the governmental one and the non-governmental.

 

As regards the profitability of the banking system, the BNR head economist said that, after four months, namely between January – April, the cumulated profit is 2.9 million lei, being approximately similar to the previous year, when it was almost 8,2  billion lei, for the whole year.

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Monday, July 4, 2022