mugur isarescu : corporate liquidity and solvency in the covid - 19 pandemic - the role of policies introductory remarks by mr mugur isarescu, governor of the national bank of romania, at the virtual conference of the national bank of romania and the international monetary fund, 12 february 2021. * * * as prepared for delivery good morning director kammer and to everyone in washington and good afternoon to our guests and speakers in europe. whether you are joining us from bulgaria, poland, croatia or romania, we are very happy to welcome you to this virtual discussion. the fact that you can be with us from different parts of the world is one of the very few benefits compensating the many challenges this pandemic has forced us to face. throughout the years, back in the normal days, we had the honor to host, here, at the national bank of romania, various presentations of the imf ’ s flagship reports that fostered lively discussions among participants. the imf high - quality research has always provided a strong conceptual and empirical basis for policy - making in our region. this time, we will have the opportunity to discuss the role of policies in corporate liquidity and solvency during the covid - 19 pandemic – one of the most important topics of the regional economic outlook ( reo ) for europe published last autumn. the analysis in this edition is aimed at quantifying the potential impact of the covid - 19 crisis on corporate liquidity and solvency risks and assessing the extent to which policy support could help mitigate these risks. we commend the extensive imf exercise, using data from millions of european companies and agree with its main conclusions. job retention schemes, moratoriums on payment obligations, grants and credit guarantees can be effective in improving companies ’ liquidity needs, even more so in advanced than in emerging economies. however, moving forward, the increase in indebtedness does raise concerns for solvency risks and investment prospects. it is true that, from the central banks ’ perspective, all chapters of the report are extremely relevant. personally, i always look towards the imf ’ s research findings for confirmations of our own scenarios, different perspectives on certain topics, or even red flags. more broadly, the 2020 regional economic outlook ( reo ) for europe provides a much - needed analysis, from the imf ’ s point of view of the opportunities and challenges that our region can expect following a very difficult

on the seasonal credit program. the seasonal credit program was established in 1973 to address the difficulties that relatively small banks with substantial intrayearly swings in funding needs faced because of a lack of access to the national money markets. however, funding opportunities for smaller depository institutions have expanded significantly over the past few decades as a result of deposit deregulation and the general development of financial markets, calling into question the continued need for the seasonal program. the board is seeking specific comment on whether small depository institutions still lack reasonable access to funding markets and on the continued need for the seasonal lending program. the board would also like comment on the method for setting the seasonal credit discount rate, which is currently the average of the federal funds rate and a certificate of deposit rate, well below the proposed primary credit rate. we would value your comments on all aspects of the proposal. the ninety - day comment period ends august 22. information on where to address the comments, and more information on the proposed revision, can be found on the board of governors ’ website. conclusion in closing, i commend you and the industry, generally, for successfully dealing with the challenges of 2001. the industry has demonstrated that it is fundamentally sound and well positioned. bankers should support the development of risk management processes for those types of risk that are most relevant for their particular institution. sound accounting, auditing, and disclosure, consistently applied, have long been at the heart of efficient markets. though the quality of bank accounting and control systems is strong, bankers should heed lessons to be learned from enron and other breakdowns in accounting and audit processes. strengthen corporate governance where needed to prevent such abusive practices from occurring at your institutions. as bankers and bank regulators, we are responsible for conducting our affairs with competence and integrity. let ’ s take the opportunity times like this present and make our banking system even stronger.