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Isarescu: COVID-19-related liquidity tension peak over

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The liquidity tension on Romania's market caused by the coronavirus outbreak is past its peak, the country's central bank BNR said.

Currently, there are no blockages in meeting demand for cash in lei,  BNR governor Mugur Isarescu said in a statement published on BNR's website on Tuesday evening. However, BNR recommends that businesses and the public make the most of cashless payment instruments, he added.

The interruptions in foreign currency cash supply resulted from high demand and the suspension of some external air transport links, but the situation is returning to normal, Isarescu explained.

In the past days the credit institutions' cash withdrawals from the BNR in order to meet demand have fallen substantially. During the March 11-20 period, these withdrawals reached a record high 4.4 billion lei ($1 billion/912 million euro), twice more than in December 2019, Isarescu added. 

BNR's cash reserve fund has remained within the limits of prudence and has grown slightly in recent days, according to the statement.

According to Isarescu, the Romanian banking system is solid and operates within the liquidity and solvency parameters over the European averages, and the payment system worked without error.

On March 20, BNR decided to cut its monetary policy rate to 2.0% from 2.5% as part of a package of measures aimed at mitigating the impact of the coronavirus crisis on households and companies.

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