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 - a - 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

, but the new nbr only accounted for less than 5 percent of the former central bank employees, most of them in cash management and accounting. therefore, key departments to the functioning of a modern central bank, such as monetary policy, economic research, banking supervision and regulation, had to be built from scratch. as we have come a sufficiently long way to remember this with a smile on the face, i would like to share with you two amusing stories i deem illustrative for the hardships of the beginning. one dates back to the autumn of 1990. having been recently appointed at the helm of the national bank of romania, i held a press conference during which i stated that the banking system would operate on two tiers or two floors, with the central bank on the first floor and commercial banks on the second. the head of the institution ’ s commercial banking operations – the same person who would later manage banca comerciala romana after its separation from the national bank of romania – took these words literally and immediately complained that he had just moved to the first floor of the building and warned me that he had no intention of moving again! 1 / 5 bis central bankers'speeches at around the same time, in the early days of my term in office as governor, someone “ encouraged ” me with the words : “ welcome and good luck running an empty bank! ”. unfortunately, the trials and tribulations of the first post - communist year had practically depleted the country ’ s foreign exchange reserves in nine months ’ time. i confess that i then felt the need to go to the vault and feel with my own hands the gold bars – romania ’ s last tangible reserve in those days ( in december 1990, gold reserves stood at 68. 7 tonnes, amounting to approximately usd 850 million ) – for a boost of confidence that the rather complex economic situation might be successfully tackled. it is hard to believe that this really happened, especially now, when romania ’ s international reserves amount to approximately 38 billion euros. i will now move on to less amusing memories of those times. the avatars of economic transition rendered difficult the mission of romania ’ s central bank. monetary policy, a fundamental task of the national bank of romania, was facing numerous difficulties and constraints, as the process of lowering inflation was often undermined by the need to pursue conflicting macroeconomic objectives or avert a full - blown banking system crisis. this was because romania ’ s path towards a functional market economy was