Jose Manuel Barroso, the president of the European Commission, said after a meeting with the Romanian president, Traian Basescu, that the recapitalization of banks in the Eurozone should not affect the flux of liquidities in Romania.
“Mother banks will continue to ensure liquidities for Romanian branches,” said Barroso, quoted by Mediafax.
“I also agreed with President Basescu – this is a matter we have discussed in the European Council and today we have gone more in detail – that plans to restore confidence in the European Union banking sector should not affect the credit flow in Romania. We are talking to the ministers of finance in order to make sure that all national banking supervisors work together under the coordination of the European Banking Authority. The national supervisors will play a critical role in this process: they will insure that the Euro area parent banks continue to provide capital support for their Romanian affiliates if needed, as committed during the last Vienna initiative meeting on Romania in March 2011,” Barroso said in a statement after his talks with Basescu.
The two politicians met a day before the Euro Summit on October 26, where a set of measures to address the current tensions in the financial markets and restore confidence were decided upon.
It was determined that Greece’s public debt should be reduced to 120 percent of GDP by 2020. A voluntary contribution was agreed upon with private creditors: on notional Greek debt held by them, the nominal discount will be 50 percent. Eurozone member states will contribute up to EUR 30 billion to this private sector involvement (PSI) package. A new EU-IMF multiannual program for Greece, which will be put in place at the end of 2011, will provide up to EUR 100 billion. The summit agreed that the resources of the European Financial Stability Facility (EFSF) should be enlarged without extending the guarantees provided by member states. Around EUR 1 trillion could thus be leveraged in order to create a “firewall” against contagion from the debt crisis.
The EFSF has a lending capacity of EUR 440 billion, with about EUR 250 billion available once aid to Greece, Ireland and Portugal has been taken into account. This capacity will now be boosted up to fivefold.