NBR quenches banks' thirst with 12bn-RON loan

While the RON was under pressure on the forex market, the NBR
(National Bank of Romania) granted banks a record-high refinancing
loan worth almost 12 billion RON (2.8 billion euros) at an interest
rate of 8% a year, in order to alleviate the liquidity shortage on
the monetary market. The 12 banks that took part in yesterday’s
auction have to repay the sums in four days’ time, i.e. next
Monday. NBR’s decision came amid a worsening of the liquidity
drought on the monetary market over the last few days, with banks
charging interest rates as high as 14% a year on loans in RON
granted to one another, i.e. four per cent more than the NBR’s key
interest rate, and even above the central bank’s rate charged for
emergency loans, which is set at 12% a year. Even after the huge
loan granted by the NBR, banks continued to thirst for RON. Dealers
were asking interest rates of 11% a year for one-day loans in RON.
Since the beginning of the year, the NBR has granted banks
short-term loans, in order to allow them to refinance government
security purchases, thus indirectly allowing the Treasury to
attract funds at reasonable costs. The NBR last granted refinancing
loans to banks on September 7th, which amounted to 8.3 billion
euros, but the sums left the market when the loans fell due, on
September 14th.