Featured Product

    IMF Publishes Report Under 2019 Article IV Consultation with Romania

    August 30, 2019

    IMF published its staff report in context of the 2019 Article IV consultation with Romania. While welcoming the strong banking sector performance, Directors noted that efforts to strengthen financial stability should continue, including sustaining the good progress on implementing the 2018 Financial Sector Assessment Program (FSAP) recommendations. They called for measures to increase resilience to risks stemming from high bank exposure to the Romanian state and encouraged close monitoring of the new tax on bank assets due to its potential impact on monetary policy transmission and credit allocation.

    The report highlights that the banking sector performance is strong, while facing the new bank tax. After several profitable years, banks have strong capital and liquidity positions and their non-performing loans (NPLs) have approached the EU average level. The banking system is stable, but the tax on bank assets creates some uncertainty. The tax could negatively affect the cost of bank credit to the private sector and linking the tax to performance targets could lead to distortions in the allocation of credit and resources. The policy uncertainty surrounding implementation of the tax as well as the recently introduced Consumer Credit Reference Index (IRCC) could hinder financial sector development.

    Good progress has been made to improve resilience, consistent with the 2018 FSAP recommendations. A majority of FSAP recommendations, including debt-service-to-income ratios and currency-differentiated liquidity requirements, have been fully or partially implemented. Additional progress in some areas, in line with FSAP recommendations, would further support financial stability. One such area is the introduction of a carefully calibrated systemic risk buffer, which would increase resilience of the banking sector under a high sovereign exposure. While the exposure of banks to the Romanian state approached 20% of assets in 2018, which is one of the highest in EU, the exemption of government bond holdings from the new bank tax could incentivize banks to further increase the exposure. The authorities broadly agreed with the financial sector assessment of the IMF staff. The National Bank of Romania stressed the good progress made on many FSAP recommendations. They shared the staff concerns over the sovereign-bank nexus and have been internally discussing an introduction of a systemic risk buffer. 

     

    Related Link: Staff Report

     

    Keywords: Europe, Romania, Banking, FSAP, NPLs, Systemic Risk Buffer, Financial Stability, Article IV, IMF

    Featured Experts
    Related Articles
    News

    EBA Sets Out Standards for Pillar 3 Disclosures of ESG Risks

    The European Banking Authority (EBA) published the final draft implementing technical standards on Pillar 3 disclosures on environmental, social, and governance (ESG) risks.

    January 24, 2022 WebPage Regulatory News
    News

    EBA Proposes Guidelines on Remuneration Benchmarking, High Earner Data

    The European Banking Authority (EBA) proposed to update the guidelines on the data collection exercise on high earners and the remuneration benchmarking exercise under the Capital Requirements Directive (CRD).

    January 21, 2022 WebPage Regulatory News
    News

    MAS Issues Updates on Its Activities: Ravi Menon Becomes NGFS Chair

    The Network for Greening the Financial System (NGFS) announced the appointment of Mr. Ravi Menon, the Managing Director of the Monetary Authority of Singapore (MAS), as its new Chair for a two-year term.

    January 21, 2022 WebPage Regulatory News
    News

    CBIRC Issues Rules on Related-Party Transactions and Outsourcing Risks

    The China Banking and Insurance Regulatory Commission (CBIRC) issued rules on related-party transactions and outsourcing risks.

    January 21, 2022 WebPage Regulatory News
    News

    OSFI Issues Results of Pilot on Climate Risk Scenario Analysis

    The Office of the Superintendent of Financial Institutions (OSFI) published an update on the discussion paper that intended to engage federally regulated financial institutions and other interested stakeholders in a dialog with OSFI, to proactively enhance and align assurance expectations over key regulatory returns.

    January 20, 2022 WebPage Regulatory News
    News

    EC Issues Regulation on Adjustments to K-Factor Coefficients Under IFR

    The European Commission (EC) published a report summarizing responses to the targeted consultation on the supervisory convergence and the single rulebook in the European Union (EU).

    January 20, 2022 WebPage Regulatory News
    News

    BIS Tests CBDC with Banks; FIS Examines Tech Firm Licensing Regime

    The Bank of International Settlements (BIS) announced successful test integration of wholesale central bank digital currency (CBDC) settlement with commercial banks, as part of the Project Helvetia.

    January 20, 2022 WebPage Regulatory News
    News

    ECB Issues Opinions on Green Bonds Standard and CRR Proposals

    The European Central Bank (ECB) published its opinion on a proposal for a regulation on European green bonds, following a request from the European Parliament.

    January 19, 2022 WebPage Regulatory News
    News

    ESRB Explores Policy Response to Risks Arising from Digitalization

    The Advisory Scientific Committee (ASC) of the European Systemic Risk Board (ESRB) published a report that explores the expected impact of digitalization on provision of financial and banking services, and proposes policy measures to address the risks stemming from digitalization.

    January 18, 2022 WebPage Regulatory News
    News

    HKMA Consults on FIRO Code, Revises Policy on Foreign Exchange Risk

    The Hong Kong Monetary Authority (HKMA) is consulting on the draft Financial Institutions (Resolution) Ordinance (Cap. 628), or FIRO, Code of Practice chapter on liquidity and funding in resolution, until March 14, 2022.

    January 18, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 7912