Central bank governor: Lending outpaces economic growth

After having seen a plunge of financial intermediation Romania has seemingly reached the tipping point, where lending outpaced economic growth, governor of the National Bank of Romania (BNR) Mugur Isarescu told the conference that followed the meeting of the BNR Board of Directors. 

"Available data shows that the Romanian banking system has switched from the position of creditor to that of debtor. Let's see to what extent this is confirmed. Several factors have contributed to this. (...) When taxes and dues are paid, liquidity is drained from the market, when the Finance Ministry disburses pensions and wages there is a liquidity inflow to the market and this is cyclical dynamics. Then, a part of liquidity has been used by banks in the lending process, you may have noticed a plunge in financial intermediation, but it seems we have reached the tipping point where lending has seemingly outpaced economic growth. But let's first catch the rabbit and then make the stew. The lending growth pace is nearing 7 percent, while this year's economic growth will probably be around 4 percent," Isarescu said. 

The central bank governor explained that banks start to use a part of liquidity in the lending process, which is positive, and that lending could progressively turn into a driver of economic growth, as fiscal stimuli lose momentum. 

The BNR governor also said that the market is currently balanced, with neither surplus, nor deficit, after the slight surplus seen the month before.