Israescu: Being part of the Banking Union should strengthen financial stability

Central bank governor Mugur Isarescu believes that Romania’s belonging to the Banking Union would lead to strengthening financial stability according to statements he made on Thursday in Constanta.

“We expect our belonging to the Banking Union to lead to strengthening financial stability, to increased confidence in the national banking system, the support of sustainable growth of credits and of economic activities, Isarescu said at the festivity organized by Mircea cel Batran Naval Academy when bestowing the title of Doctor Honoris Causa on the BNR governor.

Isarescu argued that Romania is already connected to the European bank system.

“Why should Romania join the Banking Union? The first reason is that 70 percent of net shares of the banking system in Romania are in the hands of foreign, mostly European bank entities. This is a fact. Since these entities join the Banking Union we have two possibilities. The first is to learn from these entities, therefore from BCR Vienna, Austria what is being discussed in Frankfurt. The second is to have the courage to speak about realities in Romania and join the Banking Union now, before entering the euro zone,” The BNR governor said.

He mentioned that Romania established 2019 for the adoption of euro.

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“The passage to euro automatically triggers the status of Banking Union member. Hungary, Poland, the Czech Republic and Bulgaria have not set a date yet. The question of belonging to the Banking Union is a matter of choosing the moment, so we decided to do it as soon as possible. It is a political option and the right decision,” Isarescu added.

As the financial crisis evolved and turned into the Eurozone debt crisis, it became clear that, for those countries which shared the euro and were even more interdependent, a deeper integration of the banking system was needed. That’s why, on the basis of the European Commission roadmap for the creation of the Banking Union, the EU institutions agreed to establish a Single Supervisory Mechanism and a Single Resolution Mechanism for banks. Banking Union applies to countries in the euro-area. Non-euro-area countries can also join.