Recommendations

NCMO Recommendation No. R/3/2022

on the sustainable increase in financial intermediation

Having regard to:

  • the provisions of Art. 2 para. (1) and Art. 3 para. (1) let. b) of Law No. 12/2017 on the macroprudential oversight of the national financial system,
  • the pursuit of its ultimate objective, the NCMO has the intermediate objective of the sustainable growth of financial intermediation, according to the Overall Macroprudential Strategy Framework of the National Committee for Macroprudential Oversight, approved by the NCMO’s General Board in its meeting of 21 May 2018,
  • NCMO Decision No. D/7/15.12.2021 to set up a Working Group on sustainable increase in financial intermediation,
  • the significant role of the sustainable increase in financial intermediation for the Romanian economy and the banking sector,
  • the conclusions of the analysis of the NCMO Working Group on sustainable increase in financial intermediation.

Whereas:

  • Systemic risks stemming from low financial intermediation remain significant;
  • Romania has the lowest level of financial intermediation in the European Union, the indicators standing well below the other countries in the region;
  • It is important that the increase in financial intermediation is carried out on a sustainable basis so as to maintain the stability of the financial system;
  • Lending to non-financial corporations has a significant growth potential and credit institutions have sufficient liquidity and solvency resources to support the sustainable increase in lending to this sector;
  • The structural shift of the economy to a higher value added and environmentally sustainable economy comes as a great opportunity for Romania.

Pursuant to:

  • the provisions of Art. 3 para. (1) let. e) and Art. 4 para. (1) let. a) and let. b) of Law No. 12/2017 on the macroprudential oversight of the national financial system.

The National Committee for Macroprudential Oversight has issued this recommendation:

  • I. To support the structural shift of the economy to a higher value added economy, inter alia by using European funds more extensively, the NCMO recommends the following:

    1. Harmonise, through dialogue with the banking sector, the process of operationalisation of financial instruments under the NRRP and the Operational Programmes, so that financial instruments ensure a significant transfer of risk for intermediaries, for the purpose of full compliance with the provisions of Regulation (EU) No. 575/2013 on prudential requirements for credit institutions and investment firms, in order to facilitate the access to finance of the firms in the areas concerned, by (i) increasing predictability; and (ii) improving the implementation flow of EU-funded projects.

    The recommendation is addressed to the Government (Ministry of Investments and European Projects). Deadline for implementation: 30 September 2022.

    2. Extend the legal framework in order to admit non-bank financial institutions from the NBR’s Special Register as direct partners in the process of financing and implementing EU-funded projects.

    The recommendation is addressed to the Government (Ministry of Investments and European Projects). Deadline for implementation: 30 September 2022.

    3. Set up government programmes for (i) supporting competitive firms, identified based on a public methodology, inter alia by supporting their easier financing, (ii) implementing sectoral policies, correlated with economic and industrial policies to support the structural shift of the economy to a higher value added economy, which provides for supporting primarily firms in the sectors concerned, (iii) developing the partnership of local authorities, business environment and universities, especially where the local business environment can efficiently use the expertise developed in universities.

    The recommendation is addressed to the Government (Ministry of Economy, Ministry of Investments and European Projects, Ministry of Finance). Deadline for implementation 31 March 2023.

  • II. To improve entrepreneurs’ financial education and enhance the professional training of staff in the financial system, the NCMO recommends the following:   

    4. Start, alongside academia and the financial system, new programmes to increase firms’ awareness that funding via trade credits and loans from shareholders might have, in the medium term, higher total costs than those of borrowing from financial institutions and those related to capital market-based funding.

    The recommendation is addressed to the Government (Ministry of Entrepreneurship and Tourism), the National Bank of Romania and the Financial Supervisory Authority. Deadline for implementation: 31 December 2022.

    5. Set up programmes for (i) enhancing entrepreneurs’ financial education, also depending on the firms’ stage of development (start-ups and scale-ups), by organising workshops, conferences, financial education programmes at national level, (ii) creating a national framework for training young people, involving experts from banks and other financial institutions, entrepreneurs, pre-university and university teaching staff, in order to correlate the gradual and applied development of certain necessary business skills in lower, upper and post-secondary education, inter alia with regard to protection against cyber incidents and/or attacks.

    The recommendation is addressed to the Government (Ministry of Entrepreneurship and Tourism, Ministry of Finance, Ministry of Education, Ministry of Agriculture), the National Bank of Romania and the Financial Supervisory Authority.

    Deadline for implementation: 31 March 2023.

    6. Take steps, through dialogue with representatives of credit institutions and non-bank financial institutions, regarding the minimum training requirements for bank and NBFI staff involved in granting loans to companies and managing related risks, with emphasis on staff involved with companies that operate in emerging industries (technology, innovation, digitalisation, green agenda, etc.).

    The recommendation is addressed to the National Bank of Romania.

    Deadline for implementation: 31 December 2023.

    7. Involve more extensively the human and material infrastructure of the NBR and the FSA and increase collaboration with the financial and banking sectors and academia for (i) developing research in the banking and financial field, inter alia via visiting programmes, (ii) partnering for joint projects to improve the theoretical and practical training of future professionals (undergraduate and master’s students, doctoral candidates) and organising master’s programmes or other forms of post-graduate education and traineeships, (iii) supporting the adequate theoretical and empirical foundation of various national and European legislative initiatives or strategic decisions that might involve the financial system (e.g.: joining the Banking Union).

    The recommendation is addressed to the National Bank of Romania and the Financial Supervisory Authority.

    Deadline for implementation: 30 June 2023.

  • III. To diversify in a sustainable way the sources that may increase financial intermediation, the NCMO recommends the following:   

    8. Research development opportunities for financial and banking markets, by (i) analysing the development opportunity for a Regulatory Sandbox instrument, as well as analysing the regulatory framework and certain Regulatory Sandbox models developed by other central banks, (ii) increasing the competitiveness of the Romanian capital market by supporting the implementation of innovative technologies based on distributed ledger technology (DLT) among entities ensuring market infrastructure, by implementing a pilot project for a trading system and a settlement system based on DLT, in accordance with the EU framework in the field. The recommendation is addressed to the National Bank of Romania and the Financial Supervisory Authority.Deadline for implementation: 31 March 2023.9. Encourage the listing of firms on the BSE’s Multilateral Trading System, inter alia by (i) simplifying listing procedures and (ii) implementing the use of an electronic platform that can be accessed by the issuer and the authorities tasked with approving listing requests, to ensure a fast process.

    The recommendation is addressed to the Financial Supervisory Authority. Deadline for implementation: (i) 31 December 2022 and (ii) 30 June 2023.

    10. Develop the necessary infrastructure for supporting the digitalisation process of financial services, inter alia by (i) facilitating integrated access to databases regarding clients in order to improve the lending process, as well as to take actions to prevent and combat money laundering and terrorist financing and (ii) harmonising the national legislation to the European framework to ensure flexibility in the implementation of digital initiatives, by recognising the legal effect of both simple and advanced electronic signatures.

    The recommendation is addressed to (i) the Government (Ministry of Finance, Ministry of Internal Affairs) and (ii) the Government (Ministry of Research, Innovation and Digitalisation).

    Deadline for implementation: (i) 30 September 2022 and (ii) 31 December 2022.

    11. Broaden firms’ access to the activity of the Alternative Banking Dispute Resolution Centre, by amending accordingly the provisions of Government Ordinance No. 38/2015 on alternative dispute resolution between consumers and traders, regarding the power of the ABDRC, and on the dispute resolution between firms and traders whose activity is regulated, authorised and supervised/monitored by the NBR, as well as the branches of foreign traders that operate on Romania’s territory, in the banking field, via ABDRC procedures.

    The recommendation is addressed to the Government.

    Deadline for implementation: 31 December 2022

Recomandarea CNSM nr. R/2/2022

on the countercyclical capital buffer in Romania

Having regard to:

  1. the provisions of Art. 3, para. (2), letter b) and para. (3) of Law No. 12/2017 on the macroprudential oversight of the national financial system and the provisions of NCMO Regulation No. 2/2017 on the methodology and procedures used for setting capital buffers and the scope of these instruments, as subsequently amended and supplemented, namely Articles 4-9 on the countercyclical capital buffer and Art. 1 on the application of capital buffers,
  2. the objective of the countercyclical capital buffer (CCyB) to improve the banking sector’s resilience to potential losses generated by excess credit growth. The CCyB is built up in periods of excess credit growth as an add-on to the capital conservation buffer and may be released during credit crunches in order to absorb losses. The countercyclical buffer rate, expressed as a percentage of total risk exposure amount of credit institutions with credit exposures in Romania, shall range between 0 percent and 2.5 percent and shall be calibrated in steps of 0.25 percentage points or multiples of 0.25 percentage points. Where justified, a CCyB rate higher than 2.5 percent of total risk exposure amount may be set.

Whereas:

  • Lending continues to follow an upward trend, amid elevated uncertainty across the board,
  • The macroeconomic imbalances are persisting,
  • High liquidity and profitability levels of the banking sector allow ongoing access to lending of eligible debtors.

Pursuant to:

  • the provisions of Art. 3, para. (1) letters b), e) and i) and the provisions of Art. 4, para (1) of Law No. 12/2017 on the macroprudential oversight of the national financial system,

The National Committee for Macroprudential Oversight has issued this recommendation:

Art. 1 – The National Bank of Romania is recommended to keep in place the measure to set the countercyclical buffer rate at 0.5 percent, as of 17 October 2022.

Art. 2 – The National Bank of Romania is recommended to further monitor developments in the economy and lending, given the high level of uncertainty internationally and especially in the region.

Art. 3 – Until 17 October 2022, depending on the macroeconomic conditions and the developments in lending, the measure recommended to be implemented in accordance with Art. 1 may be subject to revision by the NCMO.

NCMO Recommendation No. R/1/2022 on the countercyclical capital buffer in Romania

Having regard to:

Pursuant to:

  1. the provisions of Art. 3, para. (2), letter b) and para. (3) of Law No. 12/2017 on the macroprudential oversight of the national financial system and the provisions of NCMO Regulation No. 2/2017 on the methodology and procedures used for setting capital buffers and the scope of these instruments, as subsequently amended and supplemented, namely Articles 4-9 on the countercyclical capital buffer and Art. 1 on the application of capital buffers,
  2. the objective of the countercyclical capital buffer (CCyB) to improve the banking sector’s resilience to potential losses generated by excess credit growth. The CCyB is built up in periods of excess credit growth as an add-on to the capital conservation buffer and may be released during credit crunches in order to absorb losses. The countercyclical buffer rate, expressed as a percentage of total risk exposure amount of credit institutions with credit exposures in Romania, shall range between 0 percent and 2.5 percent and shall be calibrated in steps of 0.25 percentage points or multiples of 0.25 percentage points. Where justified, a CCyB rate higher than 2.5 percent of total risk exposure amount may be set.

Whereas:

  • Lending has been confirmed on an accelerating trend, amid a global environment marked by uncertainty,
  • There are ongoing tensions surrounding macroeconomic equilibria,
  • Eligible borrowers’ access to finance is not constrained by this measure, owing to the adequate levels of the liquidity and profitability indicators of the banking sector.

Pursuant to:

  • the provisions of Art. 3, para. (1) letters b), e) and i) and the provisions of Art. 4, para (1) of Law No. 12/2017 on the macroprudential oversight of the national financial system,

The National Committee for Macroprudential Oversight has issued this recommendation:

Art. 1 – The National Bank of Romania is recommended to keep in place the measure to set the countercyclical buffer rate at 0.5 percent, as of 17 October 2022.

Art. 2 – The National Bank of Romania is recommended to further monitor developments in the economy and lending, given the high level of uncertainty, both domestically and internationally.

Art. 3 – Until 17 October 2022, depending on the macroeconomic conditions and the developments in lending, the measure recommended to be implemented in accordance with Art. 1 may be subject to revision by the NCMO.

Recommendations 2021

 

Recommendations 2020

 

Recommendations 2018 – 2019

 

Recommendations 2017