Among the reforms included by the governor in the list of needed adjustments are the energy market liberalization and the convergence of the minimum required reserve ratios.
Isarescu pointed out that the economy needs to be better prepared before joining the ERM II and, subsequently, the euro-zone.
“The realigning of major international currencies (…) makes finding the balanced exchange rate more complicated,” Isarescu told a conference organized by Coface and Mediafax.
Local authorities set 2019 as a target year for euro-adoption, which means Romania need to enter the exchange rate mechanism in the first half of 2016.
“Joining the ERM II also presents some risks,” said Isarescu, adding that Romania needs to conclude major adjustments of economic policies in order to minimize those risks.
The governor said Romania has to eliminate sources of repressed inflation, therefore the need of a free energy market, quasi fiscal deficits such as those resulted from restructuring state-owned companies with high losses, and other potential sources of budget pressures, for instance the road infrastructure upgrade costs.
But Isarescu said some monetary policy adjustments are also needed, such as harmonization of the minimum required reserve ratios, which are now much higher than the European average.