Minister Tanasescu: switch to euro needs more analysis

Two weeks before the National Bank of Romania (NBR) replaces the dollar with the euro as the reference currency for the calculation of the ROL exchange rate, Finance minister Mihai Tanasescu wants to talk to NBR Governor Mugur Isarescu about the inflation-related implications of this measure.
“We must have a very clear analysis of the effects of this measure on inflation and prices. The central bank’s decision is in line with what Romania should do and is a positive thing, but it must be carefully analysed,” Mihai Tanasecu says.
NBR Governor Mugur Isarescu last week rejected any theory implying that the switch to the euro might fuel inflation.
“I will have a talk with the governor on Monday. I am not planning to make him change his mind, but we do need to think about the implications and come up with an enforcement coordination,” the Finance minister says. What is the NBR saying?
“After the statements of Mr. Tanasescu, I have heard voices rushing to make this into some kind of a war between the NBR and the Finance Ministry. I can assure you this is definitely no war. On the contrary, the relations are excellent and I am not talking about cordiality, but cooperation,” Adrian Vasilescu, advisor to the NBR Governor yesterday told Ziarul Financiar.
Although the central bank officially announced the change on February 5, Tanasescu’s statements imply that the NBR has not detailed the issue with the Finance Ministry.
The minister said the decision was to be discussed yesterday by the NBR officials and the IMF representatives, which are currently in Bucharest for the third assessment of the stand-by agreement.
“The details will be discussed with the Finance Ministry tomorrow (today, i.e.),” Tanasescu stated.
According to Adrian Vasilescu, the Finance minister’s statements clearly point to the cooperation between the two institutions, before and after the switch to the euro. At the same time, the governor’s advisor nuances NBR’s position towards the theory according to which this move may hinder the inflation cut process. “The NBR has closely analysed the steps that must be taken and the possible consequences. All the conditions have been created so that the possible shocks determined by the novelty of the issue can be very small and short,” Vasilescu stated.
Mugur Isarescu last week announced the central bank would start selling and buying euros from the forex market, instead of dollars, with the ROL/EUR exchange rate to be directly calculated. At the same time, he firmly said the switch would not fuel an inflation growth.
“I contradict those that launched this idea. The influences are more complicated than that and we maintain our 13-14% inflation target for 2003,” Isarescu said last week.