In the run-up to the EU entry and a few years before the outbreak of the global crisis, the National Bank of Romania faced an economic and financial context that could be deemed as exceptional. Massive capital inflows occurred given the existence of a significant interest rate differential and abundant global liquidity, in the context of the gradual removal of capital controls due to the requirements of the forthcoming EU membership. This led to a rapid rise in forex credit, a sizeable nominal appreciation of the domestic currency, and booming domestic demand. In this case, trying to cool down the economy through the standard recipe of policy rate hikes would have been pointless, if not outright detrimental, by prompting even more capital inflows and nominal appreciation, thus creating a vicious circle. So the context called for the use of unconventional instruments. Such departures from conventional practices involved the full use of direct FX interventions, allowing market interest rates to fall significantly below the policy rate through liquidity management, the active recourse to reserve requirements and deploying administrative measures to control credit growth. To give you just a few examples, they involved enforcing a maximum loan-to-value ratio, introducing debt service ceilings relative to households’ monthly disposable income (the scope of which was subsequently expanded to include non-bank financial institutions engaged in lending), setting limits to banks’ forex exposure vis-à-vis unhedged borrowers, and using differentiated coefficients in stress tests (higher for EUR than local currency exposures, with even stricter coefficients for CHF- and USD-denominated credit).

These measures were efficient, at least to some extent. Although sometimes circumvented by banks, they have managed to slow down forex credit growth, providing a wise solution to the problems faced at that time by our economy. Back then, we referred to them as unorthodox monetary policy measures, but after the crisis, the IMF mentioned the National Bank of Romania as being among “the pioneers” of what later became “macroprudential instruments”. After the EU entry, the actual membership in this “convergence club” has fueled and enhanced 3/5  BIS central bankers' speeches  the catching-up process. Being in the EU meant free exchange of goods and services, along with the free movement of capital and labor, which increased trade, foreign direct investment, and migration flows, for the benefit of economic growth in our country. Moreover, in the long run, EU membership fostered convergence through investments from European funds. Romania has certainly come a long way in terms of economic convergence, with growth resuming and gaining momentum after the global economic crisis: its GDP per capita as a share in the EU average (based on PPS) more than doubled from 30.6 percent in 2003 to 62.7 percent in 2017. The advance was the fastest within the group of peer countries that recorded similar trends: for instance, Bulgaria went from 32.4 to 49.3 percent, while Hungary, the Czech Republic and Poland, which started from a more advanced level, added between 7 and 22 percentage points to the same indicator during 2003–2017.