Mugur Isărescu:
The Transatlantic renaissance - Romania as a faithful
partner and ambitious player
Opening speech by Mr Mugur
Isărescu, Governor of the National Bank of Romania, at the
Conference "The Transatlantic Renaissance: Romania as a Faithful Partner and Ambitious
Player", Bucharest, 9 December 2013.
* * *
Prime Minister Ponta,
Mr. Kennedy,
Your Excellences,
Ladies and gentlemen,
It is a great pleasure for the National Bank of Romania, and an honor for me and the board
members, to welcome such a distinguished audience. I salute the presence of Victor Ponta,
Prime Minister of Romania, who will be the keynote speaker today and that of Craig
Kennedy, the President of German Marshall Fund of the United States. Allow me to greet
their Excellences, members of the diplomatic corps, as well as the other notable guests who
represent an important array of successful domains of activity.
A special welcome to Mircea Geoană, President of Aspen Institute Romania and his team of
young, talented and hardworking professionals.
Today's gathering has a challenging topic: "The Transatlantic Renaissance: Romania as a
Faithful Partner and Ambitious Player".
Here, at the National Bank of Romania, we take pride in having always been a forum for
debating, in an open and profound manner, the themes and trends defining our age. Thus, it
is the perfect venue to host such a conference as this one, which encourages individuals to
reflect on ideals and ideas that define good society through leadership, dialogue,
entrepreneurship and regional stability.
I have read two papers prepared by Aspen Institute and the German Marshall Fund: the
report "Dialogues on the national interest. Recommendations of public policies" and the
program "East-West Gateway". They generate the object of the forthcoming debates.
Allow me to make some remarks regarding the national interest and the transformations
within the financial sector that are currently taking place in Europe.
The national interest goes beyond its economic dimension, although it is also true that the
smooth functioning of the economy is not only an objective per se, but also a means to
achieve the other objectives subordinated to the national interest. As any other European
central bank we are focused on price and financial stability. Obviously, monetary and
financial stability is an essential ingredient of economic performance. This is all the more
relevant for a catching-up economy, such as Romania. On the one hand, progress towards
convergence is impossible to imagine without capital accumulation from local and external
sources alike, and it cannot be achieved in the absence of a viable financial system. On the
other hand, investments imply a long-term outlook, whereas high and volatile inflation or
fragile financial sector hampers long-term planning.
Moreover, the recent global crisis has shown that it is far cheaper to prevent financial
instability than to rescue financial institutions in distress. Financial crises are even costlier in
emerging economies than in industrialized countries, as their ability to bear such costs is
severely constrained by spillovers between the banking system and sovereigns and the
related vicious circle of escalating risk premia.
The crisis has also revealed that effective policy remedies have a transnational perspective.
In the European Union the idea of a Banking Union emerged as a solution to break the
above-mentioned vicious circle, thus putting a stop to financial fragmentation and helping
restore the normal capital flow from the core EU countries to the periphery. In addition, the
Banking Union has the merit of removing the contradiction between the pan-European nature
of banking activity and keeping banking supervisory and resolution tasks at the national level.
In this context, Romania's membership in the Banking Union comes as a natural choice,
given that euro area banks hold three fourths of the total assets of the Romanian banking
system and two thirds of its capital.
As was the case with EU membership, the national interest may be better served in the
banking sector by relinquishing some of the national policy prerogatives. In the context of
such a high financial integration, preserving the banking supervisory powers at national level
would only entail suboptimal results, due to the limited access to information on parent banks
and the lack of a cross-border perspective. Furthermore, Romania's membership in the
Banking Union would ensure the country has an active voice in the decision-making process;
as such decisions would affect it anyway, regardless of its membership status.
I will end here my brief comment.
Once again, we take pride in hosting what will be a substantial dialogue about the role
Romania will take within the transatlantic renaissance as a faithful partner and ambitious
player.
I wish you fruitful discussions and to enjoy the Leadership Awards and Gala dinner tonight,
hosted in the beautiful Marble Hall of the Old Palace of the National Bank of Romania. Built
in the late half of the 19th century, following the French architectural style, it has harbored
the central bank from the moment it was founded. The National Bank of Romania is the
16th oldest central bank in the world, established 33 years before the Federal Reserve.
I do remember, two years ago, on December, 5th, when Aspen Institute Romania celebrated
five years of operations, I was presented with the "Values-based Leadership" award on
behalf of Aspen Network of International Partners. I cherish that memory and what this award
stands for.
I would like to thank each and every one of you for joining us.