Ctrl Bk Governor Urges Romanians To Save In Local Currency

Romanian central bank governor Mugur Isarescu advices Romanians to spend less and save in local currency, as the drop in US savings has sparkled the problems which caused the recent turmoil in the international financial market.

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“Do not ever hope a governor to encourage savings in foreign currency,” he said Friday.

Isarescu showed that in the USA there are too many net debitors, starting from the government to the population and the corporations.

"When a country does not save is hard to believe in its power to influence the global economy", the governor said.

Isarescu sees the effects of the international financial crisis strong enough to change the economic map of the world.

In Romania, the governor pointed out an effect of the financial crisis in the severe drop of the Bucharest Stock Exchange.

He said Romania, like other small countries, faces a lot of risks.

Among them, Isarescu mentioned a higher volatility on the currency trading, due to a lower demand from foreign investors and an increase of foreign financing costs, coupled with a decrease in volumes.

He said that a slowdown in capital inflows and even early outflows of profits could be expected. The governor also pointed out as a possible effect of the financial crisis an exports slowdown, due to a lower demand from European countries, which could be facing a slowdown in economic growth.

However, Isarescu recommended a suitable fiscal policy mix; together with a right absorption of European funds and a higher flexibility of the economic system.

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