Delayed relaxation of mandatory reserves

Five months after the Board of Governors of the NBR (National Bank of Romania) made its decision, a set of measures for relaxing the minimum mandatory reserves (RMO) system has been published in the Official Gazette. It says housing savings and loan banks shall no longer set up minimum mandatory reserves, while sums in transit in foreign currencies and RON will not be considered when setting up the RMOs, or calculating the average rate for sight interest. The new provisions of the regulation regarding the RMO system come into force starting with a period of observation after the publication. The delay was the result of a consulting process with the European Central Bank (ECB), which the NBR had to go through after entering the European System of Central Banks. The NBR introduced these measures on May 2 as a “continuation” of the harmonisation of the Regulation on the mandatory minimum reserves (Regulation No. 6/2002) in line with ECB standards, however the Frankfurt-based institution was only notified at the beginning of July. It responded at the beginning of August by saying that it does not approve of the zero rate set for housing banks, which would increase the already “significant” differences between Eurosystem practices and Romanian ones.