Isarescu: The time is too short for us to switch to ERM II by Jan 1, 2016

Adopting the euro currency by January 1 2019 means that we need to switch to the exchange rate mechanism (EMR II) first, by January 1, 2016, to be more precise, for which we are still unprepared, the governor of the National Bank of Romania (BNR), Mugur Isarescu, explained on Monday.

Photo credit: (c) Angelo BREZOIANU / AGERPRES PHOTO

"My opinion is that we are not ready to do this, although we are supposed to make the step in 2016. The time is too short. We need first to discuss what ERM II actually is, what does this entire exercise mean in fact, for we are talking about an exercise in which the economy is right where it's supposed to be, and the exchange rate is also precisely where it should be, and by power of the market, not while relying on the support from the central bank, the interest rates are also exactly where they should be... But we don't have the mandatory minimum reserves that we are supposed to have! Their value hovers somewhere at 2 per cent in the EU [...] While our MMRs [e.n. ? minimum mandatory reserves] in hard currency are still at 14 per cent. It is impossible to bring them down to 2 per cent in such a short while. That's why, we, the National Bank, while saying that we are best prepared to enter the Euro Zone...", explained the BNR governor, at the "Romania's Road to Euro Zone" conference.

In his opinion, there are some uncertainties regarding the exchange rate that Romania still needs to deal with. "Is this going to remain the equilibrium exchange rate when the MMRs will go down to 2 per cent? And when the liquidity we see today on the market will also not be the same? I suppose that, if we prepare really well, we won't need more than two years, two years and a half maybe [e.n. ? the minimum period of participation...