mugur isarescu : romania and the eib after 25 years opening speech by mr mugur isarescu, governor of the national bank of romania, at the eib conference " investment and investment finance in romania ", bucharest, 4 december 2018. * * * vice president mcdowell, distinguished guests, ladies and gentlemen, i would like to welcome you all at the national bank of romania. allow me to extend a warm greeting to mr. andrew mcdowell, vice president of the european investment bank and to ms. debora revoltella, chief economist of the european investment bank. it is a privilege for the national bank of romania to co - host with the european investment bank this conference on investments and investment finance. the european investment bank celebrates this year its 60th anniversary since its creation in 1958, under the treaty of rome. allow me to congratulate this important institution and the teams of the eib office in romania and the eib office in luxembourg, for their outstanding work and diligence in promoting strategic investment projects for europe and romania. the topic proposed for today ’ s conference outlines the fact that 2018 has been rich in lessons for the future, showing the impact of policy decisions upon the economic development. the economic growth is strongly linked with the economic cycle, but its durability is dependent on long - term strategic investments by far more than short - term consumption boost. i invite you all to debate the subject of investments and investment finance in romania during the two panels of today ’ s conference. the first panel will be moderated by mr. liviu voinea, deputy governor and will approach the theme of investments and investment finance in 2018. the second panel will be moderated by ms. lara tassan zanin, head of the european investment bank office in romania and will focus on the support of sustainable growth in romania, shifting from consumption to investments. ladies and gentlemen, romania and the european investment bank share a long and fruitful cooperation that started in 1990. it got closer in 2007 when romania became a member of european union and implicitly of european investment bank. this joint partnership has boosted investments in romania in areas of significant importance for the national economy, such as the infrastructure, small and medium enterprises, environment and innovation. these coordinates are totaling more than 13 billion eur allocated to around 130 projects financed by the european investment bank, besides other 70 projects financed by the european fund for strategic investments. these figures alone speak about the priorities, however i would

european developments, includes an average increase in bond yields of 75 basis points unevenly distributed across countries ( no increase for germany and more than 200 for some more vulnerable countries ), accompanied by an average drop of 10 % in equities. the outcome of the two scenarios indicates a negative impact on banks ’ common equity tier 1 ( cet1 ) capital hovering around 200 basis points in terms of deviation from the baseline scenario. this impact has to be considered against the comfortable present average cet1 ratio of 14 % enjoyed by the euro area banks. it is also important to recall that market sentiment towards euro area banks has continued to improve, despite some gyrations that broadly reflect developments in interest rate expectations ( figure 16, lhs ). while contagion from the recent events of bank resolution and liquidation remained contained, these events have also highlighted the important challenges regarding the resolvability of weak banks. notwithstanding some recent progress in non - performing loan ( npl ) disposals, the large stock of npls remains a key structural concern in several countries. in addition, overcapacity and cost inefficiencies continue to weigh on bank profitability in certain banking markets. 16 / 20 bis central bankers'speeches the economic recovery, the expected steepening of the yield curve and even the progress being made in reducing the npl level from the average peak of 8 % in 2013 to the more recent average of 5. 5 %, have improved the market assessment of future banks ’ profitability. analysts ’ earnings forecasts for 2017 and 2018 have been revised upwards since the u. s. elections, even if net interest income expectations have changed only marginally, despite improving economic conditions ( volume effect ) and ( prospective ) higher long - term interest rates ( price effect ). analysts revised their earnings forecasts between october 2016 and january 2016 ( see figure 16 black dot in left bar ) and between august 2017 and november 2016 ( black dot in right bar ) with the respective contributing factors. while forecasted net interest income was a drag on net income in the first period it contributed positively in the second period. forecasted loan loss provisions contributed positively in the second period because they became less negative over the period november 2016 – august 2017 while forecasted operating expenses increased. macroprudential policy let me now turn to the role of macroprudential policy in this risk environment. the objective of macroprudential policy is to prevent and mitigate systemic risk by strengthening the res