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Romania reappoints 'steady' cbank chief Isarescu

The Romanian parliament reappointed long-serving central bank governor Mugur Isarescu for another term on Thursday, a move likely to reassure markets unnerved by a government crisis.

Since taking over the helm of the central bank just months after Romania's anti-communist revolt in 1989, Isarescu has gained a reputation for steady policymaking and a pro-reform stance that helped the country join the European Union in 2007.

His main challenge now is to combat the painful recession engulfing Romania in the aftermath of global financial woes and ensure the country is ready to meet its goal of euro zone entry in 2014. One the world's longest-serving central bankers, the 60-year-old Isarescu has held the post ever since, with a brief stint as prime minister between 1999 and 2000.

He is widely supported by political groupings and praised, at home and abroad, for conducting policy with a steady hand. He offers welcome change in Romania, where policymaking often falls victim to political power struggles. Deputies voted 251 to 42 for his reappointment and for a new policy board that includes newcomers such as Liberal Party politician Bogdan Olteanu who have limited banking experience. 'Isarescu has been a factor of stability through the whole post-revolution period,' said Ionut Dumitru of Raiffeisen Bank in Bucharest. 'His reappointment offers markets and investors a guarantee that his line will continue to be implemented.'

During parliamentary hearings ahead of the vote, Isarescu said the government's budget deficit was a growing challenge in terms of meeting the euro entry goals, outpacing inflation. A government crisis has sowed further uncertainty this week after a split in the ruling coalition raised concerns over Romania's ability to meet the terms of a 20 billion euro aid package led by the International Monetary Fund. Isarescu's response to the financial crisis won accolades, with the IMF crediting him for resisting the temptation to slash interest rates aggressively, a move that in Hungary hammered the forint currency, weakening financial stability.

However, some economists criticise him for being slow in introducing inflation-targeting and for hurting the bank's credibility by dabbling too much in exchange rate management and by missing three out of four inflation targets since 2005. The Romanian leu showed little reaction to Isarescu's widely expected reappointment, trading near last week's six-month low hit in the wake of the government coalition split.

Isarescu: Main objective of new BNR Board of Directors is to adopt euro

The strategic objective of the National Bank of Romania's (BNR) new Board of Directors will be the euro adoption, somewhere around 2014-2015, BNR governor Mugur Isarescu said in the Parliament, on Thursday. 'It happens that the objective tallies with a fresh term-in-office. I think this mandate is feasible and can act as the catalyst that may give coherence to the macroeconomic policies,' said Isarescu.

The BNR head stressed that the list of the newly elect central bank directors, which the specialised committees presented, benefits from a trump card, namely, there is a majority that ensures continuity.'This majority, which the newcomers get added to, will have to ensure the financial stability, the price stability, the stability of the national currency, of the credits, and the money circulation. This is a sort of allegiance I pledge before the Parliament,' Isarescu specified.

In his opinion, although, from many viewpoints, the new Board is experiencing harder times, because it starts its activity in a difficult period of economic downturn, it will fulfill its tasks.

Isarescu praised the former BNR Board saying that through cohesion, professionalism and balance it succeeded to fulfill part of the important objectives related to Romania's EU joining, such as the capital account liberalization, during a time full of temptations, traps, a delusive period. The Parliament's committees on budget-finances approved, on Tuesday, BNR's fresh Board of Directors, where, except the governor post, which Mugur Isarescu was unanimously voted for, the Social Democratic Party (PSD) got three posts, the Democratic Liberal Party (PD-L) and the National Liberal Party (PNL) got two posts each, and the Hungarian Democratic Union of Romania (UDMR) one post.

Florin Georgescu, proposed by PSD, was elected BNR's first vice-governor, Cristian Popa, proposed by PD-L, and Bogdan Olteanu, proposed by de PNL, became vice-governors, while Nicolae Danila and Dinu Marin (proposed by PSD), Napoleon Pop (PNL), Virgiliu Stoenescu (PD-L) and Agnes Nagy (UDMR) were voted members of the BNR Board of Directors.

Mugur Isarescu and Cristian Popa were unanimously voted for and Lucian Croitoru, Daniel Daianu and Silviu Cerna failed earning the number of votes required to join BNR's new Board of Directors, said the chairman of the Committee on Budget and Finances in the Deputies' Chamber, Viorel Serban.The incumbent BNR Board's term-in-office runs out on Oct 10.

Sursa: http://www.actmedia.eu

Tags: isarescu bnr directors stability board euro romania

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