Economy – The National Bank of Romania

The National Bank of Romania (NBR) is the country's central bank. The NBR is an independent public institution with its headquarters in Bucharest. It is the sole institution invested with the power to issue notes and coins to be used as legal tender on the territory of Romania. The domestic currency is the 'Leu', with its fractional unit, the 'Ban'.

"The National Bank of Romania was commissioned on 11/23 April 1880 as a result of the Romanian liberal way of thinking centered on the idea of putting in place a solid credit system."

The then Minister of Finance, Ion Campineanu, became the first governor, Eugeniu Carada -the true founder- together with Emil Costinescu were responsible for the organization and functioning of the Mint, while Theodor Stefanescu was in charge of the accounting organization of the Bank. "The start-up capital amounted to lei 30 million, of which lei 10 million was state owned. The NBR was first improperly accommodated in a small space on the premises of The Rural Estate Credit. As of 16th December, the state withdrew from the association with the NBR, which turned into a privileged privately-owned bank, and the government’s rights passed on to the shareholders."

The Bank was granted the prerogative to issue currency by 31st December 1920, subsequently extended to 31st December 1930. Because of the war, the NBR moved to Iaşi on 15th November 1916. The military administration of Germany, detained the Bank’s main office and property in the capital city, Bucharest. On 14th November 1916, the NBR Treasury was moved to Iaşi then sent to Russia under the protection and guarantees offered by the Russian Government. Until now, the Russian Government didn’t return the whole Treasury to the Romanian Government. This fact was the cause of a diplomatic conflict between the two countries. The Russian Government doesn’t want to recognize that it still has a part of our Treasury, and therefore it doesn’t want to give it back. In that difficult period the National Bank was the only Romanian institution capable of giving a real help and to get money into circulation. The date of 1st December 1918 represents the day when The Romanian Government and the National Bank came back to Bucharest. With an economy destroyed by the war and a government without resources, this bank represented the major Romanian factor that was able to sustain and revitalize the country’s economy.

"During the Great Depression in 1929-1933, the NBR granted loans in an effort to balance the government budget; this operation continued into the next years. The Bank’s powers and role in the field of finance had been steadily growing to such an extent that it was empowered to control the banking activity, the circulation of foreign exchange, and to map out the country’s financial and monetary policies."

After the communist regime seized power (6th March 1945), the banks came under state ownership in two stages: first, Communist Party members forced their way into the NBR Board on 28th November and second, banks and credit institutions were dissolved and wound up, except for the NBR and the CEC (The Savings House), on 11th August 1948. During communism, the economy was planed, the prices were fixed by the state, not by the market, and consummation was also planned. Communists considered they need only one bank, so they would have a better control over the money supply. After the revolution in 1989, the National Bank of Romania had to restart its operations performed before 1946 so as to pick up where they left when communism came to power.

Ensuring as well as maintaining price stability is the main objective of the National Bank. The major tasks NBR focuses on are:

To conduct the authorization, regulation and prudential supervision of credit institutions and to promote and oversee the smooth operation of payment systems with a view to ensuring financial stability;
To issue notes and coins to be used as legal tender on the territory of Romania;
To set the exchange rate regime and to supervise its observance;
To manage the official reserves of Romania.

Without prejudice to its primary objective of ensuring and maintaining price stability, the NBR supports the general economic policy of the Government.

The purchase by the NBR of debt securities issued by the Government, national corporations, national companies and other majority state-owned companies in the primary market is prohibited.

A bank with a deserved prestige, a survivor so to speak, hopefully the future will prove to be on the same optimistic tune.