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Challenges of the National Bank of Romania’s Monetary Policy on the Road to the Euro Area

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  • Damian Monica

    („Ovidius? University of Constan?a, Faculty of Economic Sciences)

Abstract

Romania’s accession to the European Union implies adopting the euro currency, which is conditioned by the participation in the Exchange Rate Mechanism II (ERM II) for at least two years. The participation in the ERM II has implications upon the monetary policy: on the one hand, the exchange rate variation must fit the ± 15% fluctuation band around the central parity, while on the other hand, the fulfilment of the inflation criteria is necessary. The first part of the paper focuses on the challenges of the National Bank of Romania’s monetary policy which issue from the Maastricht convergence criteria. In the second part of the paper we highlighted the necessity of coordination of monetary and fiscal policy in the ERM II period, being essential for achieving inflation criteria and government deficit criteria. The fiscal policy must strive, simultaneously, the budget deficit and inflation decrease.

Suggested Citation

  • Damian Monica, 2013. "Challenges of the National Bank of Romania’s Monetary Policy on the Road to the Euro Area," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 184-189, May.
    • Handle: RePEc:ovi:oviste:v:xii:y:2012:i:1:p:184-189
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    Keywords

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    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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