ANALYSIS TO INSTRUMENTS OF MONETARY POLICY USED BY NATIONAL BANK OF ROMANIA STARTING WITH 1990 IN THE CONTEXT OF EUROPEAN UNION INTEGRATION

The monetary policy play an important part to promotion and maintenance ofeconomical growth, especially in countries of transition; this has become essential to adjusting theeconomic equilibriums, presented within these economies, particularly to controlling the inflationistslide-slip and current accounts deficits, related to balance of payments. The monetary policy of theNational Bank of Romania, whose implementation will be forwards accomplished within context ofstrategy to direct inflation aiming point, will be also consequently directed to consolidation ofdisinflation process and of assuring the decreasing of inflation rate on middle term to levelscompatible with definition of prices steadiness adopted by ECB (European Central Bank. Analyzingthe operational frame of monetary policy in Romania after 1990, one might reach the conclusionthat the main used instruments of monetary policy were the following: the re-financing policy, theminimal compulsory reserve and the open – market policy.monetary policy, price stability, the re-financing policy, the minimal compulsory reserve, theopen – market policy

Gradual recovery in Euroland

The economic situation in the euro area continues to be weak. In the course of 2003, real GDP has only stagnated. Several factors prevented the expected recovery to materialize. Last year’s collapse of stock prices dampened activity, so did the high oil price. In addition, the uncertainty in the wake of the conflict with Iraq had a negative impact on the business sentiment and on consumer confidence. Finally, exports were hit by the strong appreciation of the euro. Since the spring of 2003, leading indicators have improved somewhat, but they do not suggest that economic activity will pick up strongly in the second half of this year. All in all, real GDP growth will amount to just 0.5 percent in 2003 and, thus, remain below the trend rate for the third year in a row. In the course of next year, economic activity will accelerate gradually; beginning in the spring, overall capacity utilization will increase again for the first time in three years. One factor supporting the recovery will be exports as growth in the world economy will gain momentum and the dampening factors of the euro appreciation will phase out. Internal demand will be stimulated by low interest rates; investment of firms will pick up, and also consumers will become more optimistic as the labor market situation will slowly improve. For the year as a whole, we expect real GDP to rise by 1.9 percent. Consumer price inflation will remain moderate and be in line with the target of the ECB. The European Central Bank (ECB) will leave key interest rates at their low levels for the time being. If the economy starts to recover in the fourth quarter of this year, as we expect, there will be no reason to loosen the policy stance further. The ECB will most likely start to tighten policy when the upswing has gained momentum and capacity utilization has increased considerably. Therefore, it is not likely that interest rates will already be raised next year. The budget deficits in most countries will again be higher than anticipated in the national Stability Programs. For the year as a whole, the aggregated deficit in the euro area will rise to 2.6 percent in relation to GDP, compared to 2.2 percent last year. Next year, the stance of fiscal policy will be roughly neutral with differences among the member states. The budget situation in Germany is a major cause for concern. Already last year, the deficit exceeded the 3 percent limit of the Stability and Growth Pact (SGP). The same will be true for this year. The current plans for 2004 make it very likely that the deficit will exceed the 3 percent margin once again. A similar scenario can be expected for France, where the announced measures will not prevent the deficit to reach more than 3 percent for the third year in a row. Several governments are acting against their own announcements by allowing excessive deficits to persist. That is in clear contradiction to the Broad Economic Policy Guidelines (BEPG), which call for a continuous reduction of structural deficits. By violating these rules and also the commitments made in the context of the Stability Programs, fiscal policy is losing credibility. Should the Stability Pact fail, it would not be because of its “tight rules” but because governments fail to comply with the rules which they have established themselves --

THE IMPACT OF THE FINANCIAL CRISIS ON MONETARY AND FISCAL POLICY IN THE EURO AREA

Coordnation of both policies allows to avoid crisis situations having destibilizing effect on economy. Cooperation between central bank and government is quite difficult due to preclusive aims of fiscal and monetary policies. Financial crisis in 2008 had a profound impact on many changes in governance of monetary and fiscal policies in the euro area. It revealed significant economic decline and problems related to public finances (increase in debt obligations) in the euro area. In reaction to the crisis in the euro area, the monetary authorities introduced many changes. An increase in expansionary monetary policy speaks volumes about an attempt to utilize the transmission channel of the monetary policy to improve economy. This paper focuses on highliting the changes ocurred in monetary policy and fiscal policies that were the consequence of the financial crisis in the euro area. The article verifies the hypothesis that the increased level of the coordination of monetary policy and fiscal polices caused by the financial crisis contributed to deepening the crisis in its early stage in the euro area (in the period of 2008-2009). To verify the hypothesis the following research methods were used: review of scientific literature, statistical research methods and graphic presentation of economic events.The financial crisis started in 2008 has contributed to many changes in the conduct of monetary and fiscal policy in the euro area. In the euro area significant decline in economic growth and problems of public finance (debt growth countries) is noticeable as a result of the crisis The aim of this article is to highlight the changes in monetary and fiscal policy in the euro area, which emerged in the aftermath of the crisis. The article verifies the hypothesis that during the financial crisis the coordination of monetary policy and fiscal policy weakened the deepening of the crisis in its early stages in both the euro area

The impact of EU price rules: Interchange fee regulation in retail payments. CEPS-ECRI Working Paper 4 February 2020

Debit and credit cards have gradually increased in importance as instruments for retail payments. This has prompted anti-trust authorities at both national and European levels to investigate and limit the interchange fee-based revenue model of four-party schemes. These moves were followed in 2015 by the introduction of the Interchange Fee Regulation (IFR), which introduced price rules to nurture a competitive, innovative and secure payments environment for all stakeholders. The IFR caps the interchange fees on consumer debit and credit cards and prohibits restrictions on co-badging and certain requirements to honour all cards for merchants. This paper assesses the impact of the IFR. Based on a literature review and data analysis, it concludes that the IFR has led to a drop in interchange fees – in some cases below the maximum defined in the legislation in all EU member states. The decrease in the interchange fee is largely reflected in lower charges for merchants, although the reduction is – at least partially – offset by higher scheme fees charged by international four-party card schemes and by higher fees for cardholders. The policy recommendations aim to increase transparency for a fuller understanding of the functioning of the market and to enhance competitiveness in both the market for card payments and other payment instruments

A Study Looking the Electronic Funds Transfer

The aim of this paper is to present the characteristics of the most important electronic funds transfer in the world, both interperson and interbank. We identified the following informations: location, type, owner, operator, number of transactions, transsactions value, clients, financial scheme and the message format.electronic funds transfer, ACH, SWIFT, CHIPS, TARGET.

Euroland: Upswing postponed

The recovery in Euroland has started at the beginning of this year but it has remained rather moderate. Real GDP increased at an annual rate of less than 1½ percent during the first half of 2002. Capacity utilization has declined further and unemployment continued to go up. While exports have gained some strength, domestic demand has just about stabilized. Against the background of weak economic activity the increase in consumer prices has calmed down considerably. Several factors can be made responsible for the sluggish economic performance. Consumer sentiment was affected by the price increases at the beginning of this year and obviously also by the introduction of the new currency. Profit expectations of firms have not improved sufficiently as it is also reflected in the collapse of stock prices. In addition, export expectations have deteriorated recently because of the uncertainty about the US economy and the appreciation of the euro. In the light of the recent turbulences on stock markets and the increased uncertainty about the economic outlook in the euro area, the ECB will probably not raise interest rates this year as was expected a few months ago. In fact, there is a discussion whether the ECB would — or even should — lower interest rates. According to both pillars of its monetary policy strategy, an easing of monetary policy cannot be justified. Money growth still exceeds the reference value by a wide margin. Although our analysis indicates that money demand has become unstable recently, there is a risk that there is some excess liquidity in the euro area and that the high money growth cannot be explained by special factors alone. The perspectives for price level stability have also not improved considerably. The budget deficit in Portugal and also in Germany will probably exceed 3 percent of GDP this year; in Italy and France it is approaching this level. The European Commission has started the excessive deficit procedure for Portugal and may do the same for Germany soon. However, it is not certain there will be the necessary majority in the ECOFIN Council for the decision whether an excessive deficit exists. One cannot exclude that Italy and France have an interest to block such a decision because they also have problems of meeting the obligations of the Stability and Growth Pact. So it is possible that the finance ministers of these four countries which together have 35 votes in the Council will prevent the decision about the excessive deficit procedure. The coming months will show whether the Pact really has teeth. We are strongly in favor of a strict application of the Stability and Growth Pact. The recent deterioration of consumer and business sentiment does not, in our view, imply that a renewed downturn is imminent. After a relatively sluggish growth in the rest of this year, economic activity will pick up considerably in the course of 2003 and real GDP will rise faster than potential output. For the year as a whole, real GDP will increase by 2.3 percent, after 0.8 percent in 2002. The labor market situation will improve slowly in the course of next year. Inflation will remain moderate also because the ECB will tighten monetary policy gradually; in addition we expect that wages will rise only moderately. The consumer price index will increase by 1.6 in 2003, after 2.1 this year. --

The Open Method of Co-ordination on Pensions - An Economic Analysis of its Effects on Pension Reforms

This paper analyses the potential effects of the open method of co-ordination on pension reforms in the European Union from an economic point of view. The main results are: (1) For the first time, the Commission formally participates in the input of pension policy-formation of the member states, but without affecting their ultimate decision-making powers. (2) However, the OMC might foster yardstick competition and thus mutual learning from the reform experiences of other member states. (3) In contrast to that, no clear effects on the rent-seeking behaviour of special-interest groups and thus on their influence in shaping pension reforms can be derived.Pension Reform, EU Integration, Regulatory Competition

European Financial Markets After EMU: A First Assessment

This paper reviews the first evidence on the impact of European Monetary Union on European capital markets, one year after the launch of the single currency. Our assessment of this evidence is very favourable. On almost all counts EMU has either changed the European financial landscape already drastically or has the potential to do so in the future. We argue that this is less due to the well-known direct effects of EMU, such as the elimination of intra-European currency risk, than to a number of indirect consequences through feedback mechanisms that seem to have been triggered by EMU.

European Financial Markets After EMU: A First Assessment

This paper reviews the first evidence on the impact of European Monetary Union on European capital markets, one year after the launch of the single currency. Our assessment of this evidence is very favourable. On almost all counts EMU has either changed the European financial landscape already drastically or has the potential to do so in the future. We argue that this is less due to the well-known direct effects of EMU, such as the elimination of intra-European currency risk, than to a number of indirect consequences through feedback mechanisms that seem to have been triggered by EMU.European Monetary Union; european capital markets