If you sell potatoes, you normally look at the price at other stalls. This does not mean that you set the prices together, says a member of the BNR board
Transparency and the exchange of information are the basis of the formation of prices on the financial markets, and the mechanisms specific to the reference indices cannot by themselves constitute a presumption of the existence of anti-competitive coordination, said Cristian Popa, member of the BNR's Board of Directors, on Thursday at the conference “Financial intermediation: realities, challenges and perspectives”, organized by the CFA Romania Association.
“This is the more official message from my colleagues, from our side. My message is that this is the only way we protect consumers in Romania. It is a plea to do things right, not to invent, not to regress. I think it would be a fantastic regression and we would not even have that reduced financial intermediation that we have, if we did not have market indices. It is like saying: we have a stock market, but we do not have a BET index, we do not have an indicator of market, we don't know what the stock market is doing. We must and will continue to defend our independence, which should not be questioned, under any scrutiny. And financial stability, but we hope not to end up there,” said the BNR official.
In April, the president of the competition authority, Bogdan Chirițoiu, stated that the investigation of the Competition Council regarding ROBOR does not concern the regulatory framework, but the behavior of the banks and, if fines are imposed, they will be substantial, considering the scope and size of the companies involved.
The ROBOR index has been around the key rate for the last 30 years, fluctuating within the corridor between the deposit facility and the credit facility, and its evolution must be analyzed in correlation with the macroeconomic context and liquidity in the market, Popa also said.
“The ROBOR index, I studied the subject a little, has been around the key rate for the last 30 years, fluctuating between the deposit facility and the credit facility. ROBOR at 3 months, in the period 2021-2022, when inflation started to appear, had a synchronized growth trend. Not only in Romania, and in the Czech Republic, and in Hungary, and in Poland. If we also look at what the FED (Federal Reserve) did System, no) and what the ECB (European Central Bank, no) did, the market interest rates have increased everywhere. I don't think that the central bankers have increased the interest rate, because this is the most powerful tool of the central banks. It is somehow absurd to ask why the ROBOR has increased,” the central banker said.
According to him, the ROBOR increased largely because the National Bank increased the key interest rate in the fight against inflation.
Popa is worried that the independence of the BNR is being called into question
“We have a mandate for price stability. All central banks in the world have raised interest rates, responding to inflationary pressures. And now let's say: look what happened in Romania, the ROBOR increased, let's look for culprits, I think it's not right. And it affects us. It affects us, at the Central Bank, because the independence of the central bank is called into question, after all. This is a superpower of the central bank, to establish interest rates, because that's the only way we can contribute to price stability”, added the BNR official.
He emphasized that the ROBOR is an index, calculated daily, “transparently”, by reporting 10 contributors.
“I was thinking how to explain to the public. I think the simplest explanation is as follows: it's fixed like on the stock market. On the stock market there are buyers, there are sellers, there is a bid quote, there is an ask quote. Also, let's come to discuss whether transparency is good or not, I think it's a fantastic regression. All the time, and not only me, but also the CFA, and the studies, I appreciated the study that the CFA published recently, all the time I support transparency, in the same way, with the potato market, if you look at the price of potatoes at other stalls, that does not mean that you can sell potatoes at other stalls, the simple fact is that the institution subsequently checks whether its own quotations are displayed and accessible, it does not demonstrate the existence of anti-competitive practices and another very important aspect: no other institution than the central bank can question the way we conduct monetary policy. There is nothing pleasant in raising the interest rate, but that is what we have to do in delivering to our customers, the currency consumers, and for this we need independence, including when we set the rules.” said the BNR representative.
