The Challenge of Economic Rebalancing in Europe
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The Challenge of Economic Rebalancing in Europe

Perspectives for CESEE Countries

Edited by Ewald Nowotny, Doris Ritzberger-Grünwald and Helene Schuberth

In the long aftermath of the acute global financial crisis of 2008/09, “rebalancing” the economy with new sources of growth and productivity remains a persistent necessity. This book addresses the resulting trade-offs and challenges. These needs, and the corresponding policy challenges, are especially prevalent in Europe, in particular Central, Eastern and South-Eastern Europe. On this issue, this book contributes lessons learned from earlier balance sheet recessions. It also addresses the often overlooked link between macroeconomic imbalances and economic inequality. Further contributions focus on the interaction between monetary policy and financial stability, adding a regional perspective to these important issues.
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Chapter 15: A central bank’s dilemmas in highly uncertain times: a Romanian view

Daniel Daianu


This chapter looks at policy dilemmas faced by the National Bank of Romania (NBR) over the years, framing the analysis in a European and historical context. These dilemmas include older concerns, such as massive capital inflows and outflows as well as a very burdensome legacy of resource misallocation and entrenched expectations of high inflation. They also include newer concerns that arose or intensified during the Great Recession, namely corrections of large macroeconomic imbalances under very unfavourable international circumstances and in a highly uncertain European environment. While the NBR’s monetary policy arrangements (‘light’ inflation targeting) have provided leeway for undertaking the correction of imbalances, high euroization has dented their efficacy, given the wealth effect and the balancesheet impact of exchange rate depreciation. Moreover, the spectre of stagnation in the euro area, financial deleveraging, unconventional policies pursued by key central banks, the ongoing reform of banking regulation and supervision, the growth of shadow banking, and so on have created a range of big challenges for the central banks of the newer European Union (EU) member states.

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