The National Bank is planning to liberalise non-residents' access to the monetary market by allowing them to open deposits in ROL. The new regulations are to be enforced as of next April.
The Central Bank is planning to take this liberalisation step in April 2005, one year after the enforcement of the new foreign currency regulations, to meet a pledge the bank made during negotiations with the European Union, National Bank of Romania (NBR) sources told Ziarul Financiar.
The Central Bank has scheduled talks with Brussels experts for the coming period, concerning the safety measures it will take to prevent potential speculative capital inflows, triggered by the high interest rates on the Romanian market (for instance, the introduction of a prohibitive fee for premature cash withdrawals or the establishment of minimum maturities).
The liberalisation of the movement of capital, allowing the creation of deposits in the domestic currency was initially scheduled for 2004. However, the National Bank decided to postpone it because of the spectacular expansion of the budget deficit and the difficulties encountered in covering the risks related to the very high interest rates - attractive for speculative capital.
Practically, the restrictive monetary policy measures enforced by the central bank to slow lending down and, implicitly, the budget deficit, would have only increased the appetite of foreign investors for speculative capital movements.
According to analysts, it is extremely risky to fully liberalise the movement of capital before the inflation and interest rates are down to levels that make speculative capital inflows unappealing to investors.
In June 2004, the Romanian banking market offered average interest rates of around 14% for deposits attracted from clients, whereas such interest rates abroad never exceed 3%, both for euros and for US dollars.
Obviously, such a big gap between the ROL interest rates and those paid abroad for foreign currency deposits are paving the way for speculative capital inflows, which have already found ways of making stock purchases from the capital market, or acquiring T-bills.
And foreign investors cannot stay indifferent as long as the interest rate gap allows them to get much bigger yields than they would abroad.
According to the liberalisation calendar, long-term inflows with an impact upon the real economy were liberalised by the end of 2003, with foreign currency operations with a direct impact upon monetary policy to be liberalised by the time Romania joins the European Union.
As of January 1, 2003 the National Banks' authorisation has no longer been needed for residents' transactions in foreign securities; short-term loans granted by non-residents to residents; the personal loans given by residents to non-residents; and the guarantees given by residents to non-residents.
The next stage in the relaxation of capital and financial operations had originally been scheduled for January 1, 2004. However, by comparison, it took Western countries several decades to complete the equivalent process.
razvan.voican@zf.ro
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