The NCMO meeting of 23 March 2023
The first meeting in 2023 of the General Board of the National Committee for Macroprudential Oversight (NCMO) was held on 23 March 2023.
The NCMO was established by virtue of Law No. 12/2017 on the macroprudential oversight of the national financial system, thus ensuring that Recommendation of the European Systemic Risk Board (ESRB) No. 3/2011 on the macroprudential mandate of national authorities was implemented. The NCMO brings together representatives of the National Bank of Romania, the Government of Romania and the Financial Supervisory Authority. The NCMO’s mission is to ensure coordination in the field of macroprudential oversight of the national financial system by setting the macroprudential policy and the appropriate instruments for its implementation.
During the meeting, Board members examined analyses and adopted measures concerning macroprudential policy and systemic risk, namely the regular analysis on the recalibration of the countercyclical capital buffer and the draft Annual Report of the National Committee for Macroprudential Oversight for 2022.
The NCMO General Board was informed of: (i) the actions taken by the addressees in order to implement the recommendations issued by the NCMO in 2022, as well as those issued in the previous period, which were not completed or are applicable on a permanent basis, (ii) the systemic risks to financial stability identified by member authorities as per their specific area of competence, with 31 December 2022 as reference date, and (iii) the solvency stress test results for the banking sector. Moreover, aspects related to the government exposures of the banking sector in Romania were also discussed during the meeting.
The NCMO General Board took note of the latest events on the compulsory motor third-party liability insurance market and recommended the Financial Supervisory Authority to adopt measures that should lead to the normal functioning of this market.
NCMO Recommendation No. R/1/2023 on the countercyclical capital buffer in Romania was unanimously approved. Specifically, amid an environment still riddled with uncertainty and given that eligible borrowers’ access to finance is not negatively influenced by the application of the buffer, with the liquidity and profitability levels of the banking sector placing Romania among the top EU Member States, the National Bank of Romania is recommended to keep in place the measure to set the countercyclical buffer rate at 1 percent as of 23 October 2023. Furthermore, the National Bank of Romania is recommended to further monitor developments in the economy and lending.
In order to strengthen financial system resilience and the real economy’s capacity to recover, amid the geopolitical turmoil, it is mandatory to ensure the adequate build-up of capital reserves by credit institutions.