Closing remarks for the 13th edition of the Regional Seminar on Financial Stability
Florin Georgescu, First Deputy Governor of the National Bank of Romania
Bucharest, September 13, 2019
Distinguished Guests,
Ladies and Gentlemen,
 We have reached the end of the 13th edition of the Regional Seminar on Financial
Stability and it is my pleasure to provide some closing remarks.
 After two days of interesting presentations and intense debates, I will try to
summarize some of the ideas presented here.
year's
 In this edition of the Financial Stability Seminar, whose topics was
we have discussed about:
"Inclusion and Financial Stability",
Financial inclusion and income inequality
o
Correlation between macroprudential policy and financial inclusion
o
Access to banking financing
o
Climate-related risks
o
All these were discussed in the context of financial stability.
 Some of the subjects, like macroprudential policy and its effects, were discussed
in-depth these days, but also in the previous editions of the seminar. And that's
how it should be. This policy represents a key element in ensuring financial
stability.
 according to ESRB recommendation, has "the ultimate
Macroprudential policy,
objective to contribute to the safeguard of the stability of the financial system as
a whole, including by strengthening the resilience of the financial system and
decreasing the build-up of systemic risks, thereby ensuring a sustainable
contribution of the financial sector to economic growth". On the other hand, the
focus of is to safeguard individual financial
micro-prudential supervision
institutions from idiosyncratic risks and prevent them from taking too much risk,
while ensuring the consumer protection of both investors and depositors.
 In the past years, many of these issues have been addressed. In terms of
macroprudential policy, we have seen in all the European countries measures
implemented on the supply side, namely capital buffers, and in some member
states even measures on the demand side. This is also the case for Romania which
introduced debt service-to-income and loan-to-value requirements.
 Some of the topics, like financial inclusion and inequality are just as important
as macro and microprudential policies and I welcome the fact that some
presentations addressed these aspects.
 Financial inclusion and income inequality are more and more a subject of interest
for central banks. It is a topic that was on the agenda of a previous financial
today's
stability seminar and also, and in my opinion, it deserves a special
attention.
 The papers discussed these days lead to the idea that higher financial inclusion
will reduce inequality, but what I would like to emphasize is that in low income
and developing countries in general, the most important factor in reducing
inequalities stays within the national authorities competencies.
 Proper economic policies must be implemented in order to ensure inclusive
economic growth, which generates the reduction of inequality. As it was very
well underlined previously, households in Romania borrow more than the
inhabitants of peer countries. However, credit to low-income people does not
come from banks, where they are not eligible. They resort to non-financial
institutions instead, where looser credit standards come at the cost of higher
interest rates.
 Adequate economic policies will help increase the credit worthiness level of
low-income citizens, which then can apply for sustainable loans.
 Also, good economic policies means an increase in the quality and complexity of
manufactured products within an inclusive economic growth. It means higher
research and development expenditures that will determine an increase in the
supply of medium and high tech goods.
 The global economy is still in a favorable position, albeit decelerating, while the
uncertainty is rising. New opportunities, but also new risks and new challenges
emerge, such as Brexit, the trade and currency war, the cold war of technology,
the debt crisis, money laundering, climate changes, higher inequality. All these
aspects must be addressed as complementary to current policies.
 Besides the discussions that took place here, related to the soundness of the
financial sector and the need to have financial services widely accessible, I would
like to underline in which I strongly believe.
two main points,
The first one is that "There is no financial inclusion without social inclusion"

As we look at the development indicators, we can notice, on the one hand, that
significant quantitative progress have been achieved in reducing the worldwide
poverty across countries. One the other hand, however, there are still important
and rising differences related to the living standard, healthcare, education,
sanitary conditions within the countries.
 Inequality among the citizens affects their living standards, state of mind and the
democracy itself.
 Interest in social spending issues has risen globally over the last decade. The IMF
has voiced increased concerns about rising inequality, the need to support vulnerable
groups, to address demographic, technological and climate developments. In their
2019 report, social spending is mentioned as a key policy in maintaining social and
political stability.

Even companies seem to intend to change their strategy. After being accused of an
obsession with short-term earnings while neglecting investment, depressing
wages and failing to pay for the negative externalities they created, some changes
in the corporate decision-making are expected.
The second point is that "There is a strong link between financial stability, on the
one hand, and capital and financial discipline, on the other."

A competitive and stable economic framework has to ensure an appropriate balance
between rights or liberties and obligations or accountability of entrepreneurs.

While many efforts have already been made on the macroprudential side, we
should also pay attention to the micro level. When a crisis hits, you have to have
your house in order. That means you have to address preemptively your own
vulnerabilities.

At the heart of any economy lies the capital, which in developing countries is the
main factor of production. The quantity and quality of capital ensure the
competitiveness of the economy, which creates the conditions for reaching an
optimal macroeconomic equilibrium.

The segregation between freedom and responsibility at the level of firms
seriously undermines the foundation of the market economy and creates deep
social disparities.
 Besides a strong capital base, a fully functional market economy needs strong
financial and payment discipline. Without these, financial instability would likely
appear.
*
* *
 And, I would like to conclude by expressing, on behalf of the National Bank of
Romania, our appreciation to all the participants for attending the seminar and to
the IMF for their constant support in organizing such useful debates.
 As the purpose of the seminar is to discuss current financial stability challenges
and to exchange knowledge in dealing with such challenges, I believe that the
objective has been achieved during these two days event.
 Finally, taking into account: first, the issues I have mentioned above; second, the
direct and strong correlation between the capital and the real economy and third,
the fact that the distinguished participants who will take part in the next year
seminar can offer the possibility to share experience among countries and
institutions, I would like to suggest that the 2020 event topic to be "The capital
in the real economy as a cornerstone of the financial stability".