Romania'S Monetary Policy Mechanisms, During The Health Crisis

The health crisis caused by the pandemic has brought to the fore the role that monetary policy plays in avoiding the complications of a possible economic crisis generated by the lack of economic activity. During the coronavirus pandemic, the Romanian banking system operated in normal parameters of liquidity and solvency, above European averages. Through its position in the banking system and in the economic life of a country in general, the central bank seeks to achieve objectives set by the legislative forum, the only one to which it is formally subordinated. The task of the central bank formulated as an objective refers to keeping inflation under control, ensuring and regulating the amount of money in circulation and interest rates, preventing bank failures, ensuring liquidity for both the banking system and banking operators, and achieving increases sustainable economic development. A key task of the central bank is the development and implementation of monetary policy. Defining monetary policy during the coronavirus pandemic, it can be seen that it is represented by the monetary measures taken by the state and the central bank to achieve the balance between the money supply and the money needs of the economy, or to influence in a certain way economic situation. In this context, at the level of the entire Romanian financial-banking system there was at the beginning of the state of emergency a surplus of liquidity, but the preference for liquidity specific to periods of crisis caused some temporary blockages, these being well managed by financing budget expenditures and the economy. As well as increases in interest rates on the money market. Due to the monetary policy of the National Bank of Romania, liquidity flows were significantly optimized, including due to bilateral operations performed by the NBR, the financing of state expenditures was carried out without syncope, and interest rates were considerably reduced.