“The average liquidity in the money market is of EUR2 billion, which is excessive. However, the money doesn’t seem to make its way into the economy,” Isarescu told a seminar on investment organized by the central bank.
The central bank cut its main lending rate in four steps to a record low of 4% in 2013, but kept the reserve requirements unchanged at 15% for Romanian-leu denominated liabilities and at 20% for foreign currency liabilities.
Isarescu said the central bank has introduced minimum reserve requirements for hard currency liabilities in 2006-2008 to discourage forex lending, which had been growing at a “madly” pace.
After the financial and economic crisis hit in late 2008, the bank has lowered its minimum requirements for foreign currency liabilities to 20%, from 40% previously.
“We are ready to reduce them further in 2014. We also plan to lower the requirements on leu-denominated liabilities, which should free up some 16 billion lei (around EUR4 billion), but there is already a surplus of RON8 billion in the market,” Isarescu said.