Romania belongs to Europe not only in geographical terms, but also thanks to its one-of-a-kind cultural features. Standing at the confluence of the East and the West, being the sole Christian Orthodox nation among the Latin peoples, the sole Latin-rooted speaking people in the Orthodox East and a cultural “melting pot” in itself, Romania boasts a culture that carries a valuable historical legacy. The National Bank of Romania is definitely a part of this legacy and was one of the key drivers of modern Romania.

Since its establishment back in 1880, the NBR, like the Romanian nation itself, has been facing/grappling with several major challenges, including the historical events of 1989 and the ensuing economic transition. The NBR, however, has always strived to deliver stability and worked to preserve respect for both historical roots and the advent of novelty as well as progress.

Historically the 16th central bank in the world, the National Bank of Romania patterned the Belgian model of the time, deemed as both suitable and sustainable for the new independent Romanian state and its legal system in the 1880s. It is worth mentioning that the Belgian statutory landmarks also inspired the set-up, two years later and miles away, of another institution: the Bank of Japan. In spite of different social and cultural conditions, Romania and Japan enjoyed similarities: the establishment of central banks in both countries was closely linked to the modernisation of their society, the organisation and even some touches of the architectural style of their buildings drew on the French models, while their founding fathers, both emblematic leaders of their times, have never held the position of a Governor.  

Through the years, the Bank managed to somehow preserve the spirit of Liberal progressivism that was at the heart of its creation. The NBR backed the country’s development, helped in the dire times of both World Wars, while later it strove to resist the half-a-century harsh communist ruling which trimmed down its role to make it fit to an altered model – the centrally-planned command economy – and forced Romania to face a debt default in the early 1980s. Emblematic for its active diplomacy may be the fact that all documents certifying Romania’s Treasure being temporarily sent to Moscow during World War One and pending recovery had been well preserved by the Bank staff even during the few years with Soviet advisors on its premises. The complete file of the Romania’s Treasure has been handed over along with an oath to fight for its recovery by each of the NBR Governors ever since.  

Three decades ago, as communism collapsed, Romanians saw both challenges and opportunities: an in-depth switch of ownership, governance and, more important, the turnaround of mentalities as the communist illusions sold out. The entire fabric of the society has underwent a sweeping change. A loss of landmarks prevailed for most Romanians along with the exuberance of getting rid of austerity and the hope to regain some natural aspirations: freedom of speech and public opinions, free cross-border movement, privacy and upgraded living standard.

The NBR, like most of its ex-communist peers, embarked swiftly on a vast and complicated reset process which was never experienced before - from centrally-planned to market economy - and struggled to keep the course in the unchartered waters. To restore most of the original central banking functions along with in-depth reforms of the state-owned banking sector was in the spotlight. Moreover, Romania’s return to the international debt market as reserves dried out amid a harmed debt record, required active diplomacy at a time when almost all other Romanian decision-makers were strongly debating an important issue for revamping the economy: a fast-track or a gradual approach to reform.  

After a harsh late 1990s, with Romania stepping up the gradual approach to reforms and bearing an undeserved label of a “near-default” nation amid a strained international market following the Asian and Russia crisis, the political consensus for NATO and European Union membership has been gathered quite swiftly. At the turn of the century, negotiations kicked off in the year 2000. Despite its status of a young democracy and still laggard economy, Romania’s option for the NATO and EU objective was straight and firm.

The NBR’s involvement in the EU accession was crucial at the time, with central bank leadership lent to the Government to manage and pursue an active diplomacy not only to secure that Romania will join the EU in 2007 - not 2010 as initially envisaged by the Union’s representatives - but through sharing internally all the expertise it had gained from years of fruitful cooperation within the BIS framework and wise negotiations on macroeconomics with international organisations such as the IMF, the World Bank or the EBRD.

The NBR has been a member of the Bank for International Settlements since 1930, the year the latter was created. It has a stake (8,564 shares) in the BIS equity for which it earns dividends on an annual basis. However, the most important benefit of this membership was the assistance from the BIS in designing a two-tier banking system in Romania and building and consolidating its central bank functions as the country left the communist-planned framework for fundamentally reshaping its economy towards a functioning market.

A bridge loan from the Bank for International Settlements was critically helpful in the early 1990s as the NBR was struggling to cover the depleted foreign exchange reserves, while a valuable BIS expertise has been constantly shared throughout the years in the area of supervision, payments and statistics. In 2005, the Bank for International Settlements offered the NBR key guidance regarding transparency and communication as the Bank was implementing a new monetary policy strategy, i.e. inflation targeting. Every year throughout the past three decades the NBR experts and officials have steadily attended specialised gatherings on key topics such as international statistical database, financial stability, regulations or supervision.

Romania’s central bank proved to be a fast learning student, relying on the relationships it build over time with the Bank for International Settlements, International Monetary Fund or, later on, with the ECB and other ESCB members and trying to adapt their valuable expertise to the local context. It thus managed to offer Romanians and foreigners alike a model of a nation-wide responsible institution, well connected to the European and international arena, focusing on updating continuously to the new trends.

Celebrating the NBR’s 130th anniversary, Governor Mugur Isărescu underlined that ”the far-reaching and beneficial reform our institution has undergone for the past two decades, the reconnection with the European System of Central Banks (ESCB), would not have been possible without the various types of support from other central banks and international financial institutions. During its transformation and consolidation process, the National Bank of Romania became a top ranking institution, capable of meeting the European standards and providing assistance to other central banks.”

Indeed, the NBR has been sharing its hard-won expertise not only internally, with other local authorities, but also with its peers via several EU-guided technical assistance projects in the region, with Serbia and Moldova. NBR specialists had often been on the IMF’s assistance staff list for programs in Ukraine, Afghanistan, Egypt or other countries in Africa, on various topics, from monetary policy to communication and public relations.

The art and the active diplomacy of the NBR inside and outside Romania are well-recognised by top officials, and we mention just a few of them:

“(Back in 1990s) It was impressive to see the difficulties in which you (Romania) were and, at the same time, the great enthusiasm of many of your young leaders trying to promote a rapid process of change, in spite of all what they perceived as reluctances to reforms and, indeed, all the heritage of the past time which led the wise leaders – such those of your Central Bank – to prefer the gradualist approach to the so called shock therapy, but mentioning the shock therapy (…) I keep really vivid memories from that time and our frequent exchanges and trustful relationship with the National Bank of Romania. A moment ago, the Governor was insisting on the importance of confidence in the economic life, in particular in the monetary field. I must say that confidence and mutual trust was permanently maintained and I believe this is something we can be proud of on both parts. (…) Let me congratulate you at least for your passion in maintaining this kind of relation,” former IMF Managing Director Michel Camdessus said during a keynote address in Bucharest in 2013.

And not seldom the NBR has been called on to compensate for the lack of coherence of political decisions as Romania was struggling to restore macro-economic equilibria as well as the confidence at home and abroad.

Former ECB President, Jean-Claude Trichet, pointed out that: “The cooperation between the ECB and the NBR began well before the actual accession of Romania to the EU. In October 2004, for example, I visited the central bank (…) to prepare the ground for the future cooperation between the ESCB and the NBR in anticipation of the EU membership of Romania. Since then the integration of Banca Naţională a României into the ESCB has proceeded smoothly, and the work carried out by the central bank’s managers in the respective ESCB committees has been highly appreciated for its dedication and very high standard. Let me take this opportunity to state how important is Central Bank independence, which is called for by the EU legislation.”

Among the key reference points of the NBR’s active diplomacy on the European front one may spot the European Central Bank Cultural Days project in 2009 when Romania was the sixth country in focus for the worldwide audience.

In that context, on the 20th anniversary of the 1989 revolution in Romania and the fall of the Iron Curtain in Europe, featuring Romania in Frankfurt for a vast audience contributed to a deeper understanding of the culture of one of the newest EU Member States. Three weeks of events in the banking capital of Europe reflected the historical multiculturalism of a country located between Central and Eastern Europe and the Balkans, with roots in the most prestigious civilisation of the ancient world. The joint ECB-NBR 2009 project underlines a good start in the EU cooperation record. Later on,the Romanian central bank’s own 2010-2015 Cultural Days programmes were adapted to the local audience. Thus, the NBR proved again it was giving back to the society not only price and financial stability, but also a model of responsible institution and of sustainability, playing a key role at home and abroad for Romanians.

As Jean-Claude Trichet noted in his address at the 130th NBR anniversary, central bank independence remains a hotly-debated topic all across the world. Nevertheless, a silver-line may be found in all debates around this subject: communication as the key ingredient for the much-desired transparency and accountability that would allow central banks to safeguard their independence. In a nutshell, central bankers need to be there, to explain, to show and practice accountability, and should make strenuous efforts to reach a broader approach and perspective to enhance dialogue with the entire society.

From the tight-lipped mantra of a few decades ago to forward-guidance and a persuasive, empathic communication style, the central banking community, including the NBR, followed a radical path seeking to secure transparency and build public trust as key ingredients to make their mission, policies and actions more effective.

As a frontrunner of broadly-based changes both in the Romanian economy and the whole society, the National Bank had managed to sail through the hectic and confusing times of the early 1990s towards the European Union’s shore where the principles of democracy, market economy, the rule of law and competition are not just abstract theories.

During this journey, opening up for the public at large was a harsh test for the Bank, with the first interviews in the early 1990s puzzling officials with the wonder of “How come they could not get the message!?”, while matching their words with deeds to earn trust posed even more dilemmas given the changing institutional and media landscape as well as the low financial literacy all across the Romanian society of those days. It was a lot of learning-by-doing for the National Bank of Romania too.

Confidence was probably the most precious asset undermined by communism. Restoring trust abroad, while advocating for reforms at home that were still perceived as theoretical values, was not an easy task. Nor was the revamping of an economy stripped of the natural laws of competition and governance rules for so many years, while trying to reconnect it to the real world. No wonder that one headline in a leading international financial newspaper back in the early 1990s carried a flash of wit - “Is-ă- Rescue”, underlining the dimension of the NBR’s leadership tasks in those tough times.

As in the case of many central banks across the world, communication has been a constant challenge for the National Bank of Romania too. However, the shift to inflation targeting and the redenomination of the Romanian currency (slashing four zeros) in 2005, just two years before Romania’s EU entry, brought in more discipline for the “New Kid on the (inflation targeting) Bloc”, as foreign analysts labelled the NBR at the time.

Regular media briefings, more conferences and seminars, up-to-date tools, dedicated educational and outreach projects, tweeting and blogging became part of the new communication framework for the National Bank of Romania. While diversification of tools and audiences came in, some standard communication and accountability instruments - such as publishing accounts of the meetings or establishing regular parliamentary hearings - were postponed until recently amid fears of misleading or misunderstandings by the general public that was yet to grasp the very essence of the banking and financial business, not to mention central banking activities.    

With inflation tamed in the single-digit zone and the Romanian leu fully convertible, the Bank increased transparency boosted the public positive perception, strengthening the NBR’s reputation further. However, on the flipside, oversized expectations emerged, with people demanding answers and solutions from the central bank to all the problems in the economy. As were the hopes that the National Bank of Romania could make up for actions and policies that naturally belong to other institutions.

As the 2007-08 global financial crisis unfolded, it took a while until the loss of trust in the main institutions of the financial industry filtered in to also affect the National Bank of Romania. For example, a few years ago, public perceptions, influenced by local fake-news campaigns echoing the “post-truth era”, started to point to the Bank as being “the banks’ lawyer”. Moreover, as loose or uneven fiscal moves hindered the efficacy of the overall macroeconomic policy mix in Romania, the central bank openly voiced its concerns regarding the sustainability and impact on growth potential of such populist policies, triggering harsh criticism from their promoters.

Austerity measures, the recession, a slower-than-expected economic recovery along with the view that the banking sector alone is to be blamed for these hardships - even though, unlike elsewhere, no bail-outs were resorted to in Romania - created locally a mood that eroded the high prestige that the National Bank of Romania enjoyed prior to the crisis. That sentiment became mainstream all across the globe as well. Central bankers were thus cornered to deliver more to the general public in their countries, up to actively punish the offenders of fiduciary and prove more empathic with debtors and, why not, more compliant, otherwise their independence was up to be openly put at risk by politicians as public representatives.

With credibility locally shaken and given the difficulty to change perceptions and mentalities in a fast-moving, “post-truth” environment, coupled with the absence of unbiased media and an upswing in populist movements, most central banks across the world, including the NBR, may face a possible delay in recovering the public trust to pre-crisis levels. Nevertheless, that slow recovery of the trust gap should not erase the NBR’s legacy and its reputation as an important pillar of reforms and modernisation of the country, as well as a promoter of key European values through an active diplomacy and art.


Mirela Roman, strategy consultant, NBR Chancellery, May 2018  

Mirela Roman

Mirela Roman

Consultant strategie, Cancelaria BNR

Disclaimer este o platformă - forum pe care specialiştii din Banca Națională a României dezbat principalele evoluții macroeconomice și financiare locale și internaționale. Opiniile exprimate sunt strict personale, nu reflectă poziția oficială a Băncii Naționale a României și nu implică sau angajează în niciun fel această instituție.
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