Popa (BNR): There is excess of bank saving which could go to real Romanian economy

There is in Romania an excess of bank saving which could go directly to the real Romanian economy by means of the capital market, said Cristian Popa, a member of the BNR Administration Board, on Wednesday.    “We have excess of deposits versus credits, we have excess of bank saving versus bank credits. This excess could finance even budget deficits of other states and we have an indicator called net external active stock of the private banking system,” said the BNR official at the   Summit of Fund Administrators in Romania.He pointed out that in the last decade, these net external active stock of the banking sector were negative.   “There were billions of passive euros, although Romanian commercial  banks made loans from abroad. In the meantime, they became positive, so we can say that local commercial banks credit the foreign sector. While in July 2021  we had a plus of 6.1  billion euros, and local banks exported 6 billions as capital, in July 2008 we had a deficit of 16 billion euros. That showed that there was capital, there was money in Romania which could finance local economy better, finance private economy, we might even finance public deficit, but why finance the deficit of other states?”, Popa mentioned.   According to him there is excess of bank savings which could go to real Romanian economy by means of the stock market. Popa pointed out that 85 billion lei represent the exposition of the banking sector to companies with Romanian stock, 64% of the entire company bank credit. In other words, the BNR representative pointed out we have the lowest financial intermediation degree in Europe. In his opinion, this degree grows healthier if besides credits there is capital, if besides the bank there are minority shareholders, if there is a stock market.   He pointed out that the stock market takes capital where it is needed, where it creates value. Moreover, banks are among the biggest intermediaries at the stock exchange.  “The two industries are close and banks are fund distribution machines, because they have a vast network in subsidies. I think that entrepreneurship means innovation. Through the exchange entrepreneurs can grow, therefore the exchange supports innovation. Consumers win, so does the entrepreneur and minority shareholders, those who bought shares. BNR supports and stock exchange. It does so for selfish reasons, because the stock market is in fact a wheel of the monetary policy conveyor mechanism. The credit  market is the bigger wheel, but a good transmission of central bank policies is needed and a developed stock market improves that transmission, it feeds financial intermediation,” Popa said.   The Association of Fund Administrators organized the third edition of the Fund Administrators' Summit in Romania, held over September 28 and 29, 2021.