Mugur Isărescu: Policy support and the emerging “new normal”how well-positioned are Romanian firms? Opening speech by Mr Mugur Isărescu, Governor of the National Bank of Romania, at the European Investment Bank (EIB) webinar “Investment and Investment Finance in Romania”, 23 February 2022. * * * Vice President Thomsen, Distinguished audience, Ladies and gentlemen, Welcome to this year’s webinar organized by the European Investment Bank in partnership with the National Bank of Romania, titled „Policy support and the emerging “new normal”: How well-positioned are Romanian firms?”. I am delighted that so many of you could join us virtually this morning. Today, as we are shifting to a new phase of the global pandemic (and hopefully the last one), we will discuss the latest developments in investment and investment finance in Romania. We will try to provide an overview of what is needed in order to use the economic recovery as a springboard for change and transition to a more digital and greener economy. Please allow me to extend a warm welcome to Vice-President Christian Kettel Thomsen and his colleagues from the European Investment Bank, including Chief Economist Debora Revoltella and Ms. Lara Tasan Zanin, the Head of the EIB office in Bucharest. I would also like to express our appreciation for the EIB’s continuous involvement and support in engaging with stakeholders in Romania through this valuable series of events. Romania and the European Investment Bank share a long and fruitful partnership that has favored investments in important sectors of our economy.

Company Law in a number of countries, such as the UK, gives primacy to the interests of shareholders when defining the objectives of a company and its decision-making. The objectives and rights of a broader set of stakeholders, including workers, suppliers and wider society, tend to be secondary (Mayer (2013)). This governance structure has stood the test of time. But it is not without distributional consequences. If power resides in the hands of one set of stakeholders, and they are shorttermist, then we might expect high distribution of profits to this cohort, at the expense of ploughing back these profits (as increased investment) or distributing them to workers (as increased real wages). To some extent, this matches the stylised facts on rising inequality – rising executive and shareholder compensation and faltering real wage growth. The shareholder model may, ironically, have contributed to unfair shares. If so, this suggests that one avenue worth considering further is corporate governance reform. A set of corporate incentives which had as its fulcrum long-term company value and which more fully reflected the interests of a wider set of stakeholders might help rebalance the scales – for example, towards investing rather than distributing. Such an alternative model is certainly not without precedent. It is found in a number of countries around the world (Mayer (2013)). Inequality and corporate governance are deep, structural issues. Central banks do not have many, perhaps any, of the solutions to these problems. But the stakes – a more stable, faster-growing, fairer society – could not be higher.