Talking Points of Daniel Dăianu, Member of The Board of The National Bank of Romania - Conference of The Oenb, Vienna, 24 November 2014

Talking Points of Daniel Dianu, Member of the Board of the National
Bank of Romania -- Conference of the OeNB, Vienna, 24 November 2014

The views expressed in this presentations should not be construed as being
necessarily the official position of the NBR
Preliminary remarks
Where does the Romanian economy come from?
Dilemmas of older vintage
A new age, new dilemmas
A change of paradigm
Breakdown of models
Banking (finance) reform
What central banks are supposed to do
The fear of secular stagnation
EU crisis
An age of uncertainty
A liquidity squeeze during 2008/2009, like other NMSs (high external

deficits; big private borrowing); IMF and EU assistance for EU member states
with different ER arrangements
Massive correction of external deficits: the current account deficit went down
to 0.8% of GDP in 2013 (from a double digit level during 2007-2008); the
role played by markets freeze and upsurge of exports
Massive correction of fiscal imbalance during 2010-2013; the role of

agreements with the EC and IFIs
Inflation at 1.6% at the end of 2013; in 2014 inflation is likely to be nearby
Economic growth is forecast at cca. 2.5% in 2014 (from 3.5% in 2013, which
was influenced by agricultural output) and a similar figure in 2015
Public debt trebled, buy it is stabilizing around 40% of GDP.
Feds tapering of its stimulus finds Romania much better prepared than
during 2008/2009 turbulences: correction of imbalances and buffers
Real GDP growth rates (% y/y)
10.0
8.1
8.0
8.5
6.9
6.0
3.5
4.0
2.0
2.4
1.1
2.0
0.6
0.0
-0.8
-2.0
-4.0
-6.0
-7.1
-8.0
2006
2007
2008
2009
2010
2011
2012
2013
2014F
2015F
GDP RO
8.1
6.9
8.5
-7.1
-0.8
1.1
0.6
3.5
2.0
2.4
CEE
6.5
5.5
2.6
-3.7
4.7
5.6
1.4
2.9
2.6
2.8
GDP EU28
3.4
3.1
0.5
-4.4
2.1
1.7
-0.4
0.0
1.3
1.5
CEE; RO; EU 28; Source: European Commission (AMECO), Own calculations

(Bulgaria, Croatia, Hungary, Latvia, Lithuania, Former Yugoslav Republic of
Macedonia, Montenegro, Poland, Romania, Serbia, Turkey)
2014 2015 Source: European Commission, Autumn forecast 2014
ESA 2010 methodology
0
-1
-2
-2.4
-3
-3.2
-4
-3.0
-2.7
-4.2
-5
-4.5
-6
-6.4
-7
-6.9
-8
-9
-10
2008
2009
2010
2011
2012
2013
2014F
2015F
Ro ESA95
-5.6
-8.9
-6.6
-5.5
-3.0
-2.2
-2.1
-2.8
Ro Structural
-8.3
-9.6
-6.0
-3.6
-2.5
-1.7
-1.7
-2.5
EU 28 ESA95
-2.4
-6.9
-6.4
-4.5
-4.2
-3.2
-3.0
-2.7
RO, EU 28 (Net lending (+) / borrowing (-)); RO (Structural budget balance)

Source: European Commission, Autumn forecast 2014; ESA 2010 methodology
The correction of the current account imbalance (% of GDP)

5.0
0.0
-0.8
-5.0
-4.5
-4.6
-4.6
-4.5
-1.2
-1.4
-10.0
-13.4
-11.5
-15.0
-20.0
-25.0
2007
2008
2009
2010
2011
2012
2013
2014F
2015F
Romania
-13.4
-11.5
-4.5
-4.6
-4.6
-4.5
-0.8
-1.2
-1.4
Bulgaria
-24.3
-22.4
-8.6
-1.5
0.1
-0.8
2.6
2.1
2.3
Poland
-6.1
-6.5
-3.9
-5.0
-5.2
-3.5
-1.3
-2.0
-2.4
Hungary
-7.2
-7.0
-0.8
0.3
0.8
1.9
4.1
4.3
4.3
Source: Eurostat, European Commission, Autumn forecast 2014

BPM6 methodology: Romania, Poland (2011-2015), Hungary
GDP - ESA2010
Jan-2008
Feb-2008
Apr-2008
May-2008
Jun-2008
Aug-2008
Sep-2008
Nov-2008
Dec-2008
Feb-2009
Mar-2009
May-2009
Jun-2009
Aug-2009
Sep-2009
Nov-2009
Dec-2009
Feb-2010
Mar-2010
May-2010
Jun-2010
Jul-2010
Sep-2010
Oct-2010
Dec-2010
Jan-2011
Mar-2011
Apr-2011
Jun-2011
Jul-2011
Sep-2011
Oct-2011
Dec-2011
Jan-2012
Mar-2012
Apr-2012
Jun-2012
Jul-2012
Aug-2012
Oct-2012
Nov-2012
Jan-2013
Feb-2013
Apr-2013
May-2013
Jul-2013
Aug-2013
Oct-2013
Nov-2013
Jan-2014
Romania CDS 5Y vs. USD
900
800
700
600
500
400
300
200
100
Source: Reuters Datastream
12.00
Average inflation, % (YoY)

10.00
8.00
6.00
4.00
2.00
0.00
-2.00
Q12008
Q32008
Q12009
CPI
Q32009
Q12010
Q32010
Q12011
CORE1 *
Q32011
CORE2 **
Q12012
Q32012
IPPI ***
Q12013
Q32013
Q12014
Inflation target
Source: National Institute of Statistics, NBR;

*CPI minus administered prices; **CORE1 minus volatile prices (vegetable, fruit, eggs, fuels)
***Industrial production price index
100
General government consolidated gross debt (% of GDP)
90
81.3
78.4
80
88.3
88.1
87.1
85.0
72.9
70
60.4
60.9
57.8
60
46.4
50
41.3
39.1
40
46.9
34.2
35.1
45.5
44.7
37.3
46.1
44.8
39.4
37.9
44.6
40.4
29.9
23.2
30
12.3
20
12.7
13.2
10
0
2006
2007
2008
2009
2010
2011
Romania
EU28
CEE
2012
2013
2014F
2015F
CEE; RO; EU 28; Source: European Commission (AMECO), Own calculations (Bulgaria,
Croatia, Hungary, Latvia, Lithuania, Former Yugoslav Republic of Macedonia,
Montenegro, Poland, Romania, Serbia, Turkey)
2014 2015 Source: European Commission, Autumn forecast 2014
ESA 2010 methodology (data for the EU28 is calculated on a non-consolidated basis)
Gross External Debt * (% of GDP)

200.0
180.0
160.0
140.0
120.0
100.0
80.0
60.0
40.0
20.0
0.0
2009
2010
2011
2012
2013
2014 Q2
Romania
67.4
73.8
75.5
74.2
68.6
63.9
Bulgaria
104.8
100.7
90.5
92.1
91.0
89.9
Czech Rep.
49.9
54.7
57.5
60.2
66.3
68.2
Hungary **
174.2
162.1
184.5
160.5
144.9
148.6
Poland
58.7
65.9
71.8
70.1
69.4
69.8
Slovacia
72.9
74.3
76.7
74.9
81.2
87.3
Source: National Central Banks, Own calculations, ESA 2010 methodology

* Romania (2013-2014), Czech Republic, Hungary, Poland: According to BPM6
Methodology; ** including SPE's
80.0
80.0
Romania
60.0
% GDP
% GDP
60.0
40.0
0.0
2009
2010
2011
2012
2013
2014 Q2
Other sectors
56.1
59.0
58.5
55.2
47.7
42.8
Government
11.3
14.8
17.1
19.0
20.9
21.1
2009
2010
2011
2012
2013
2014 Q2
Other sectors
40.5
42.9
46.1
41.5
41.5
41.2
Government
18.2
23.0
25.7
28.6
27.9
28.8
Bulgaria
120.0
Hungary
200.0
100.0
150.0
% GDP
80.0
% GDP
40.0
20.0
20.0
0.0
Poland
60.0
100.0
40.0
50.0
20.0
0.0
2009
2010
2011
2012
2013
2014 Q2
Other sectors
97.0
92.9
83.6
83.4
82.6
81.5
Government
7.8
7.8
7.0
8.7
8.3
8.3
0.0
2009
2010
2011
2012
2013
2014 Q2
Other sectors
129.1
115.3
130.5
107.8
97.0
97.9
Government
45.0
46.8
54.0
52.7
47.9
51.4
Source: National Central Banks, Own calculations,

Romania (2013-2014), Czech Republic, Hungary, Poland: According
to BPM6 Methodology
80.0
Romania
70.0
70.0
60.0
60.0
50.0
50.0
40.0
40.0
30.0
30.0
20.0
20.0
10.0
10.0
0.0
Poland
% GDP
% GDP
80.0
0.0
2009
2010
2011
2012
2013
2014 Q2
Short
12.9
15.6
17.4
15.6
13.4
11.9
Long
54.4
58.2
58.1
58.7
55.2
52.0
2010
2011
2012
2013
2014 Q2
Short
11.3
10.0
9.9
8.1
8.4
7.7
Long
47.3
55.9
61.9
62.0
61.0
62.3
200.0
Bulgaria
120.0
2009
Hungary
100.0
150.0
% GDP
% GDP
80.0
100.0
60.0
40.0
50.0
20.0
0.0
2009
2010
2011
2012
2013
2014 Q2
Short
33.6
30.5
25.2
25.3
23.3
22.1
Long
71.2
70.3
65.3
66.8
67.7
67.8
0.0
2009
2010
2011
2012
2013
2014 Q2
Short
20.6
25.3
27.4
17.8
16.7
17.4
Long
153.6
136.8
157.0
142.7
128.3
131.8
Source: National Central Banks, Own calculations,

Romania (2013-2014), Czech Republic, Hungary, Poland: According
to BPM6 Methodology
Structural strain: how to deal with massive

resource misallocation (analogy with overburdened
monetary policy during the current crisis)
The persistence of high inflation (role of
expectations, moral hazard, the exchange rate
pass-through); the move to inflation targeting in
2005
(inflation
expectations
were
deeply
entrenched)
Pace of financial liberalization
Financial (capital account) liberalization and the

Tosovsky dilemma; an intense debate
The EU rules of the game (the single market and
KAL) have enhanced a boom and bust cycle (see
graphs): the impossible trinity (trilemma) is a
dilemma (Helene Rey)
The interplay between the global financial cycle and
the European financial cycle + inadequate
international arrangements
NBRs efforts to stem the skyrocketing pace of
credits of little avail: euroization and parent
funding
Boom and bust did occur in large parts of the EU

(see graphics)
The importance of private borrowing in judging
resilience to shocks (BoP crises)
Romania faced a liquidity crisis because of
markets freeze: the role of EU/IMF financial
support and the Vienna Initiative
In CESEEs public debts and private debts are much
lower than in most of the EU: is there a puzzle with
credit? Deleveraging
Central West Europe (Belgium, Germany, France, Netherlands)

8.8
Banks, Loans; Change
GDP; Change
6.8
4.8
2.8
0.8
-1.2
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
-3.2
-5.2
Source: Eurostat, European sector accounts (Central bank; other monetary financial
institutions), Own calculations
South Europe (Spain, Portugal, Italy, Greece, Cyprus)

23.0
18.0
13.0
8.0
3.0
-2.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
-7.0
Western Europe (Ireland, United Kingdom)

20.0
15.0
10.0
5.0
0.0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
-5.0
-10.0
-15.0
Northern Europe (Finland, Sweden, Estonia, Latvia, Lithuania, Denmark)

20.0
GDP; Change
15.0
10.0
5.0
0.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
-5.0
-10.0
East Central Europe (Croatia, Hungary, Austria, Poland, Slovenia, Slovakia)

15.0
10.0
5.0
0.0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
-5.0
Eastern Europe (Bulgaria, Romania)

57.0
47.0
37.0
27.0
17.0
7.0
-3.0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
-13.0
Macroeconomic policy in a small open economy

The choice for a light (flexible) IT
Managed floating (allowing the Ron to appreciate
to 3.1/1 euro was suboptimal)
The euroization impact on MP: the balance-sheet
(wealth) effect due to exchange rate dynamics
NBR cannot be complacent about big exchange rate
gyrations (inflation, financial stability (balancesheet effect))
Deleveraging and GDP dynamics
The transmission mechanism operates, though

with difficulty (lending rates); credit supply and
demand constraints are high (high indebtedness?):
is creditless recovery possible?
IT relies also on administrative tools (RR for both
euro and Ron funds)
Macroprudential tools: they operated during
2006-2008, but with little efficacy
Disinflation has occurred, but with large deviations

from target (due to various, mostly supply shocks);
large negative GDP gap after the crisis hit has
helped disinflation
Fiscal policy was pro-cyclical after 2009 due to the
forex constraint and the big structural budget
deficit. The Monetary Policy easing was restrained
because of ER depreciation fear. Why GDP bounced
back though?
Export dynamics were key in recent years; REERs
and productivity gains
115.0
Monetary real policy rate (%, avg, YoY)

REER (CPI - based, 2010=100)
GDP (seasonally adjusted, 2010=100)
110.0
105.0
100.0
95.0
-1
Q12008
Q32008
Q12009
Q32009
Q12010
Q32010
Q12011
Q32011
Q12012
Q32012
Q12013
Q32013
Q12014
-2
Q1- 90.0
2014
85.0
Source: National Institute of Statistics, NBR; REER European Central Bank
The stimulus entailed by a less tight MP is

counteracted by the wealth effect induced by an
exchange rate depreciation (inflation and the
balance-sheet impact)
The impact of monetary conditions
When the transmission mechanism breaks down
lower policy rates are less effective (credit demand
and supply constraints)
An age of uncertainty
A paradigm shift (price stability is not sufficient for economic
stability)
Finance as an in-built destabilizer: the trilemma is a dilemma,
stupid
A breakdown of models: how to model non-liniarities (tail events)
Proliferation of extreme (tail) events/shocks
Complexity on the rise and inability to understand it frequently
An over-burdening of central banks functions
Central banks can no longer rely on simple rules
Prospects of much lower growth in the industrialized world (a
balance-sheet recession, SecStag, very time consuming in its
healing)
Social and political implications of economic slowdown/recession
Ineffective international policy coordination
A decline in robustness and resilience
The eurozone is, arguably, no longer menaced by a collapse (ECBs

actions and large macro-imbalance corrections in its periphery), but
Specter of debt deflation in the eurozone;
The link between sovereign debt and bank balance-sheets has not been
severed;
Fragmentation of markets (although the periphery pays much less for
issuing its debt)
Internal demand is very weak suffering from the negative loops between
weak activity, fragile banks, weak firms, diminished incomes, and the
need for fiscal consolidation
The bottom line: how to foster economic growth?
The breakdown of the growth model that relies on heavy capital imports
The fallout from the Ukraine crisis on economic recovery in Europe
(geopolitical risks); other geopolitical risks (The Arab world)
Capital flows reversals (risk aversion)
Feds tapering of its stimulus
The policy space issue (apart from fiscal space)

Diminishing inflation has allowed a relaxation of
the monetary policy rate to 2,75% in November
2014; there is room to continue easing by reducing
the policy rate and reserve requirements; caution in
view of Feds tapering impact, the balance-sheet
effect and a prospective rise of inflation in the
second half of 2015
A threat of the zero lower bound in Romania?
Highly improbable in the near future
Does joining the Banking Union make sense?

How to manage monetary policy and financial
stability policy in a central bank
The need to develop capital markets
More local banks?
Rethinking the growth model (fostering
comparative/competitive advantages)
Joining the euroarea is a political commitment and
decision; the euroarea needs to solve its problems
and Romanias economy become stronger
Macro-prudential considerations will play an increasing role

in the conduct of macroeconomic policy: the pluses and
minuses of deep financial markets (size of economy,
participation of domestic investors, the international policy
regime)
The governance of the eurozone? Its fiscal underpinnings are
very precarious
The reform of the banking (financial sector): size; its
speculative nature; shadow banking sector (the return to
Glass Steagal does make sense)
The big players role in global and European financial cycles;
do they care about the externalities they produce? A new
Bretton Woods is needed (international policy coordination):
conceptual issues; avoiding the dark corners (O. Blanchard)
Thank You

Talking Points of Daniel Dăianu, Member of The Board of The National Bank of Romania - Conference of The Oenb, Vienna, 24 November 2014

Hochgeladen von

Dokumentinformationen

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Talking Points of Daniel Dăianu, Member of The Board of The National Bank of Romania - Conference of The Oenb, Vienna, 24 November 2014

Hochgeladen von

Copyright:

Verfügbare Formate

Talking Points of Daniel Dianu, Member of the Board of the National

Bank of Romania -- Conference of the OeNB, Vienna, 24 November 2014

Where does the Romanian economy come from?

Dilemmas of older vintage

A new age, new dilemmas

A liquidity squeeze during 2008/2009, like other NMSs (high external

Massive correction of fiscal imbalance during 2010-2013; the role of

Inflation at 1.6% at the end of 2013; in 2014 inflation is likely to be nearby

Public debt trebled, buy it is stabilizing around 40% of GDP.

Real GDP growth rates (% y/y)

CEE; RO; EU 28; Source: European Commission (AMECO), Own calculations

RO, EU 28 (Net lending (+) / borrowing (-)); RO (Structural budget balance)

The correction of the current account imbalance (% of GDP)

Source: Eurostat, European Commission, Autumn forecast 2014

Romania CDS 5Y vs. USD

Source: Reuters Datastream

Average inflation, % (YoY)

Source: National Institute of Statistics, NBR;

General government consolidated gross debt (% of GDP)

Gross External Debt * (% of GDP)

Source: National Central Banks, Own calculations, ESA 2010 methodology

Source: National Central Banks, Own calculations,

Source: National Central Banks, Own calculations,

Structural strain: how to deal with massive

Financial (capital account) liberalization and the

Boom and bust did occur in large parts of the EU

Central West Europe (Belgium, Germany, France, Netherlands)

Banks, Loans; Change

South Europe (Spain, Portugal, Italy, Greece, Cyprus)

Banks, Loans; Change

Western Europe (Ireland, United Kingdom)

Northern Europe (Finland, Sweden, Estonia, Latvia, Lithuania, Denmark)

Banks, Loans; Change

East Central Europe (Croatia, Hungary, Austria, Poland, Slovenia, Slovakia)

Eastern Europe (Bulgaria, Romania)

Macroeconomic policy in a small open economy

The transmission mechanism operates, though

Disinflation has occurred, but with large deviations

Monetary real policy rate (%, avg, YoY)

Source: National Institute of Statistics, NBR; REER European Central Bank

The stimulus entailed by a less tight MP is

The eurozone is, arguably, no longer menaced by a collapse (ECBs

The policy space issue (apart from fiscal space)

Does joining the Banking Union make sense?

Macro-prudential considerations will play an increasing role

Das könnte Ihnen auch gefallen