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National Bank of Romania’s declaration of engagement as a member of Network for Greening the Financial System

On September 16, 2020, National Bank of Romania has become member of the Central Banks’ and Supervisors’ Network for Greening the Financial System (NGFS).

The National Bank of Romania has taken steps to identify, develop and utilize some of the specific climate risk analysis tools within the financial stability policy framework, research analysis that is highlighted in the latest editions of our report on financial stability policy framework , such as the December 2019 edition.

 

Moreover, the National Bank of Romania has facilitated the debates among central bankers, representatives of national and international institutions, economic think-tanks or academia on addressing the challenges for the financial system posed by climate change, including the annual organization, jointly with the International Monetary Fund, of an International Seminar on Financial Stability issues (e.g. in September 2019 the seminar included an Expert Panel on Climate Change).

 

The most recent, holistic and comprehensive endeavour that National Bank of Romania undertook, while chairing the National Committee for Macroprudential Oversight, to scale-up green finance in Romania, has been the set up and the co-ordination, from November 2020 until June 2021, of a working group to explore the current status, the challenges and the opportunities regarding the green finance in Romania. Given the complex aspects of climate change and therefore the important role played by multiple institutions, the group reunited around 90 members from a broad range of stakeholders: public authorities, credit institutions, representatives of international financial institutions, the private sector and relevant associations.

 

The report envisaged to identify adequate solutions to climate change impact in Romania and 16 proposals of recommendations have been issued, covering three categories of measures: (i) sustainable increase in the financing of green projects, (ii) supporting structural changes in the economy towards generating higher value added and (iii) enhancing transparency and raising awareness about the impact of climate change on the economy and the financial system. The report has been published in  June 2021 .

 

With a view to sustainably enhance access to finance for projects on the climate change agenda, as well as to increase transparency, improving reporting and the availability of climate change-related information and raising awareness on the impact of climate change in society and the financial system, the National Bank of Romania makes the following pledge:

  1. to communicate with the entities in its area of competence regarding enhancements in the frame of recommendations concerning a prudent approach to climate risk. The recommendations should cover at least the following areas: (i) governance, (ii) strategy, (iii) risk management, (iv) scenario analysis and stress testing and (v) transparency.

  2. to conduct an analysis on the opportunity of easing the prudential requirements for green finance, in line with similar endeavours and regulatory frame at EU institutional level, with a view to foster this category of lending, without affecting financial stability.

  3. to create a dashboard to monitor climate change risks to the banking sector, which should be regularly updated and disseminated, as well as to conduct annual stress tests on climate risk-related issues in the banking sector and publish the results.

  4. to introduce, in the National Bank of Romania’s Central Credit Register, the relevant information on green loans in Romania, starting from the European taxonomy and build up and manage reliable data on the green loans stock.

 

Furthermore, as a member of NGFS, the National Bank of Romania expressed the following commitments and stayed true to them:

  1. Actively contribute to the work of the NGFS and dedicate the appropriate resources in their organization to support their participation.

    Designated experts from National Bank of Romania actively participated in 2021 to the work of the Workstream on macroprudential and supervision, by contributing to the drafting of the report of the Risk differentials team.

  2. Appoint relevant expert(s) in at least one NGFS Workstream.

    The National Bank of Romania has designated representatives in each of the NGFS workstreams and contributed to the work carried out by the teams at workstream level.

  3. Raise the awareness on the work of the NGFS in their jurisdiction, their geographic area and within the international or regional standard setting, regulatory, supervisory and central bank bodies they are involved in.

    From the viewpoint of its public engagements and reports related to climate change, the National Bank of Romania takes into account the NGFS guidelines, aiming for a positive impact of the NGFS activity in our jurisdiction.

    Morever, the National Bank of Romania has set up an internal structure (Sustainability and Green Economy Office) with a view to further explore climate change implications in the Romanian banking sector.

  4. Participate when appropriate in the outreach exercises conducted by the NGFS vis a vis external stakeholders.

 

The National Bank of Romania representatives attend all the NGFS seminars and projects that are initiated by the NGFS.

 

Taking into account the above-mentioned initiatives and in addition to the common statement of NGFS in support of UNFCCC COP26, the National Bank of Romania expresses the intention for engagement, within the frame of its legal mandate, by aiming:

  • to further address the challenges posed by the climate change;

  • to deepen its endeavours for a positive contribution to climate risks mitigation in the banking sector;

  • to support international efforts along with peer institutions, to extend its international cooperation and align its approach to Green Finance domain to the International Standards Setting Bodies;

  • to contribute to the NGFS agenda for advancing actions for climate and Green Finance development; and

  • to promote and contribute to the development of the Green Finance in the Romanian banking sector and in the overall economy

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