BNR: Effects of US commercial policies and measures adopted as answer bring additional risks to financial stability

Uncertainties and effects of changes in US commercial policies and the measures adopted as answer by other states generate additional risks to Romania's financial stability, in a context already marked by high vulnerabilities, also as a result of successive shocks in previous years, according to the National Bank of Romania (BNR) Report on Financial stability in June.   The main risks against financial stability in Romania, identitied by BNR are: uncertainties at world level in the context of multiple geopolitical events, the deterioration of domestic macroeconomic balances, the risk of delayed return of credits made by the non-governmental sector and the risk associated to challenges addressed to cyber security and financial innovation.   “Serious risks are: 1) global uncertainties in the context of multiple geopolitical events, with possible amplification and 2) the deterioration of domestic macroeconomic balances. The next two systemic risks identified are estimated at a moderatelevel, as follows: 1) the risk of not paying back credits made by the government and 2) the isk associated to challenges addressed to cyber security and financial innovation. In the latter case the prospect is identification in the next period of time,”the report shows.   According to the source mentioned, domstic economic balances continued to deteriorate. In 2024, economic activity significantly dropped, under previous provisions, GDP rising in real terms by 0.8%, the lowest advance in the last decade, except for 2020, seriously affected by Covid 19 pandemic.   Economic activity grew at a low rate and in quarte 1, 2025 by 0.3% in real terms due to a temperate consumption and the intensification of the negative effect of net export.   BNR points to the fact that in 2024, twin deficits increased, being accompanied by an economic activity below expectations. At the same time, the slow PNRR implementation rate led to blocking in accessing funds and delays of planned investments. In the absence of fiscal policies able to firmly back fiscal-budget consolidation, reching the foreseen budget deficit target of 7% is affected by high uncertainties.   “The latest estimates show that a gradual and more modest recovery than the one previosuly anticipated, of economic activity, up to 2.8% in 2026, while for 2025 prognostications were adjusted on the drop (from 1.6% to 3.3%). The slosing down of economic growth was accompanied by the deepening of budget deficit, on the background of higher public expenses. The share of budget deficit in GDP was 9.2% in 2024, being the highest among EU countries, at a considerable distance versus the next most important deficit, the one of 6.6% in Poland. In the first four months of 2025, budget execution ended with a deficit of 2.95% of GDP (cash method), 0.3% less than the same period of 2024. In the absence of fiscal policy measures firmly backing fiscal-budget consolidation, reaching the target of 7% budget deficit foreseen in the medium term national budget plan, budget execution constantly avoided average term targets assumed in fiscal planning documents,”the BNR report shows.   As for the risk of not paying back credits contracted by the non governmental sector, the central bank draws attention that the quality of credits granted to companies slightly dropped, especially those with state guarantees and those granted to small companies.   Cyber risks intensified as a result of the escalation of international commercial wars and conflicts, increased by technological innovations. Cyber incidents in the financial system have in view mainly credit institutions.   The main European tendencies specific to cyber risk are also manifested in Romania. The most frequent incidents against local banks were DdoS and phishing type attacks, banks investing in digital infrastructure in order to be able to cope with challenges generated by digitization. Social engineering campaigns (like phishing, smishing and vishing) have grown of late and mainly natural persons were targetted.