The second meeting of this year of the General Board of the National Committee for Macroprudential Oversight (NCMO) was held on 28 June 2022.

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 Financial Supervisory Authority and the Government of Romania. 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 (CCyB) and the analysis of the NCMO Working Group on sustainable increase in financial intermediation.

The NCMO General Board was also informed of: (i) the results of the regular analysis on the systemic risk buffer, (ii) the systemic risks identified across the domestic financial system, (iii) the actions taken by the addressees in order to implement the recommendations issued by the NCMO in 2021, as well as those issued in the previous period, and (iv) the overlapping of capital buffers and other minimum requirements applied to credit institutions.

NCMO Recommendation No. R/2/2022 on the countercyclical capital buffer was approved. Whereas lending continues to follow an upward trend, amid the persistence of macroeconomic imbalances, 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, and to further monitor developments in the economy and lending, given the higher number of uncertainty factors regionally and globally.

Moreover, NCMO Recommendation No. R/3/2022 on the sustainable increase in financial intermediation was approved. Romania has the lowest financial intermediation among European Union Member States, and a potential improvement of the current picture, in a sustainable manner, is likely to reflect afterwards in the economic growth performance as well. The analysis conducted within the working group set up for this purpose highlights several factors that influenced the positive outcome as regards lending across countries in the region, namely: the higher capacity to absorb EU funds, the acceleration of the digitalisation process of financial services, the existence of an industrial policy supportive of competitive firms’ access to finance, as well as the keener demand from bankable non-financial corporations. The working group identified 11 proposals for recommendations. They complement a previous NCMO recommendation on applying some measures related to companies’ financial soundness, whose implementation requires the approval by Parliament of the draft law – prepared by the Ministry of Finance with NBR support – amending and supplementing Law No. 31/1990 on commercial companies. The working group recommendations cover three major lines of action: (i) to support the structural shift of the economy to a higher value added one, inter alia by using European funds more extensively, (ii) to improve entrepreneurs’ financial education and enhance the professional training of staff in the financial system, and (iii) to diversify in a sustainable manner the sources that may increase financial intermediation. The implementation of recommendations shall be monitored pursuant to the provisions of Law No. 12/2017 on the macroprudential oversight of the national financial system.

In addition, the NCMO General Board members decided not to voluntarily reciprocate the macroprudential measure of Belgium, given that the eligible exposures of the local banking sector to this country are immaterial. In addition, Board members approved the decision according to which no significant third country for the banking sector in Romania was identified in relation to the recognition and setting of countercyclical capital buffer rates. The decision on the archival nomenclature of the documents created and held by the NCMO was also approved during the meeting. The NCMO recommendations and decisions were unanimously approved by the NCMO General Board.