Romania banks safe from crisis, bank monitoring

Romania's banking system is safe from the world crisis and has excess liquidity but the central bank was committed to inject funds if needed to ensure financial stability, governor Mugur Isarescu said on Monday.
Speaking after an emergency meeting with Prime Minister Calin Tariceanu to discuss the impact on the economy of pre-election wage policies and the global financial crisis, Isarescu said: "The banking system in Romania is stable, safe and we do not foresee major emergency changes in the following period.
But ... we are ready to ensure liquidity if the Romanian banking system needs additional liquidity. "We are ready to take measures ... if needed to tighten again rules and not soften them, to tighten schemes and ways to guarantee a system of bank deposits ... to take the needed measures so the financial stability in Romania becomes obvious."
Isarescu said banking liquidity in Romania was ample and that the local leu currency's recent steep falls had been within "normal limits" and raised no "severe concerns". The leu fell 2.5 percent on Monday against the euro to a low of 3.9830 after heavy losses last week, to trade at its lowest level since December 2004.
But it bounced back to 3.94, helped by trades by a large local bank that dealers said could have been making deals on behalf of the central bank in an indirect intervention. The central bank did not comment on the currency's move, as per standard practice.
Isarescu said banks in Romania have stayed clear of high-risk derivative instruments and that liquidity remained ample or high largely because of "the central bank's stubborness to keep prudential regulations pretty severe". But he warned that excessive wage increases, above productivity gains in Romania, pose a real threat to inflation goals in the context of a hard-to-finance external shortfall.
The government has filed a court challenge to a recent parliament vote to hike teachers' wages by a hefty 50 percent, fearing such a move could damage the economy, Prime Minister Calin Tariceanu announced on Monday. Analysts have said the bill, which parliament passed last week but still needs the president's approval to become law, is an overblown pre-election give-away that will trigger a flurry of other pay claims ahead of a November 30 parliamentary ballot.