Popescu Ionu

National Bank of Romania versus

European Central Bank
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CONTENT:



1. The European System of Central Banks (ESCB) 2
1.1. Functions 2
1.2. Organization 2
1.3. Member Banks 4

2. The National Bank of Romania 5
2.1. The NBR's objective and role 5
2.2. History 6
2.3. Architecture 6
2.4. Responsabilities of National Bank of Romania 7
2.5. Responsabilities of European Central Bank 7

References 8
















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1. The European System of Central Banks (ESCB)


The European System of Central Banks (ESCB) is composed of the European Central
Bank (ECB) and the national central banks (NCBs) of all 27 European Union (EU) Member
States.

1.1. Functions
Since not all the EU states have joined the euro, the ESCB could not be used as the
monetary authority of the eurozone. For this reason the Eurosystem (which excludes all the NCBs
which have not adopted the euro) became the institution in charge of those tasks which in
principle had to be managed by the ESCB. In accordance with the treaty establishing
the European Community and the Statute of the European System of Central Banks and of
the European Central Bank, the primary objective of the Eurosystem is to maintain price stability.
Without prejudice to this objective, the Eurosystem shall support the general economic policies in
the Community and act in accordance with the principles of an open market economy.
The basic tasks to be carried out by the Eurosystem are (art. 127 TFEU):
to define and implement the monetary policy of the eurozone;
to conduct foreign exchange operations;
to hold and manage the official foreign reserves of the Member States; and
to promote the smooth operation of payment systems.
In addition, the Eurosystem contributes to the smooth conduct of policies pursued by the
competent authorities relating to the prudential supervision of credit institutions and the stability
of the financial system. The ECB has an advisory role vis--vis the Community and national
authorities on matters which fall within its field of competence, particularly where Community or
national legislation is concerned. Finally, in order to undertake the tasks of the ESCB, the ECB,
assisted by the NCBs, has the task of collecting the necessary statistical information either from
the competent national authorities or directly from economic agents.

1.2. Organization

The process of decision-making in the Eurosystem is centralized through the decision-
making bodies of the ECB, namely the Governing Council and the Executive Board. As long as
there are Member States which have not adopted the euro, a third decision-making body, the
General Council, shall also exist. The NCBs of the Member States that do not participate in
the euro area are members of the ESCB with a special status while they are allowed to conduct
their respective national monetary policies, they do not take part in the decision-making with
regard to the single monetary policy for the euro area and the implementation of such decisions.
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The Governing Council comprises all the members of the Executive Board and the
governors of the NCBs of the Member States without a derogation, i.e. those countries which
have adopted the euro. The main responsibilities of the Governing Council are:
to adopt the guidelines and take the decisions necessary to ensure the performance of the
tasks entrusted to the Eurosystem;
to formulate the monetary policy of the euro area, including, as appropriate, decisions
relating to intermediate monetary objectives, key interest rates and the supply of reserves in
the Eurosystem, and
to establish the necessary guidelines for their implementation.
The Executive Board comprises the President, the Vice-President and four other
members, all chosen from among persons of recognized standing and professional experience in
monetary or banking matters. They are appointed by common accord of the governments of the
Member States at the level of the Heads of State or Government, on a recommendation from
the Council of Ministers after it has consulted the European Parliament and the Governing
Council of the ECB (i.e. the Council of the European Monetary Institute (EMI) for the first
appointments). The main responsibilities of the Executive Board are:
to implement monetary policy in accordance with the guidelines and decisions laid down by
the Governing Council of the ECB and, in doing so, to give the necessary instructions to the
NCBs; and
to execute those powers which have been delegated to it by the Governing Council of the
ECB.

The General Council comprises the President and the Vice-President and the governors of
the NCBs of all 27 Member States. The General Council performs the tasks which the ECB took
over from the EMI and which, owing to the derogation of one or more Member States, still have
to be performed in Stage Three of Economic and Monetary Union (EMU). The General Council
also contributes to:
the ECB's advisory functions;
the collection of statistical information;
the preparation of the ECB's annual reports;
the establishment of the necessary rules for standardising the accounting and reporting of
operations undertaken by the NCBs;
the taking of measures relating to the establishment of the key for the ECB's capital
subscription other than those already laid down in the Treaty;
the laying-down of the conditions of employment of the members of staff of the ECB; and
the necessary preparations for irrevocably fixing the exchange rates of the currencies of the
Member States with a derogation against the euro.

The Eurosystem is independent. When performing Eurosystem-related tasks, neither the
ECB, nor an NCB, nor any member of their decision-making bodies may seek or take instructions
from any external body. The Community institutions and bodies and the governments of the
Member States may not seek to influence the members of the decision-making bodies of the ECB
or of the NCBs in the performance of their tasks. The Statute of the ESCB makes provision for
the following measures to ensure security of tenure for NCB governors and members of the
Executive Board:
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a minimum renewable term of office for national central bank governors of five years;
a minimum non-renewable term of office for members of the Executive Board of eight years
(a system of staggered appointments was used for the first Executive Board for members
other than the President in order to ensure continuity); and
removal from office is only possible in the event of incapacity or serious misconduct; in this
respect the Court of Justice of the European Communities is competent to settle any disputes.

The ECB's capital amounts to 5 billion. The NCBs are the sole subscribers to and
holders of the capital of the ECB. The subscription of capital is based on a key established on the
basis of the EU Member States' respective shares in the GDP and population of the Community.
It has, thus far, been paid up to an amount just over 4 billion. The euro area NCBs have paid up
their respective subscriptions to the ECB's capital in full. The NCBs of the non-participating
countries have to pay up 7% of their respective subscriptions to the ECB's capital as a
contribution to the operational costs of the ECB. As a result, the ECB was endowed with an
initial capital of just under 4 billion.
In addition, the NCBs of the Member States participating in the euro area have provided
the ECB with foreign reserve assets of up to an amount equivalent to around 40 billion. The
contributions of each NCB were fixed in proportion to its share in the ECB's subscribed capital,
while in return each NCB was credited by the ECB with a claim in euro equivalent to its
contribution. 15% of the contributions were made in gold, and the remaining 85% in US dollars
and Japanese yen.

1.3. Member banks

The ESCB is composed of the following 27 NCBs and the ECB. The first section of this
list comprises those ESCB banks that form the Eurosystem (those states that have adopted the
euro, plus the ECB) which sets eurozone monetary policy. The second section contains those
banks which maintain separate currencies.


2. The National Bank of Romania

2.1. The NBR's objective and role
The National Bank of Romania is the central bank of Romania. NBR is an independent
public institution, with its headquarters in Bucharest.
Its primary objective is to ensure and maintain price stability. The National Bank of
Romania supports the general economic policy of the Government without prejudice to its
primary objective (Law No.312/2004).
The domestic currency is the leu, with its fractional coin, the ban.
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Starting with 1 January 2007, when Romania had joined the European Union, NBR became part
of the European System of Central Banks (ESCB), and the NBR's Governor, member of General
Council of the European Central Bank (ECB).
The National Bank of Romania (Romanian: Banca Naional a Romniei, BNR) is
the central bank of Romania and was established in April 1880. It is located in the capital
city, Bucharest. The bank's first governor was Ion Cmpineanu; the present governor is Mugur
Isrescu. Eugeniu Carada is associated to the National Bank, as he was the founder of the bank
and he was elected director of the bank, but he never accepted the role of Governor. The National
Bank of Romania is responsible for the issue of the Romanian leu and as such it sets the
monetary policy, holds the currency reserves and manages the exchange rate.


The main tasks of the National Bank of Romania are the following:
to design and implement the monetary policy and the exchange rate policy;
to conduct the authorisation, regulation and prudential supervision of credit institutions, and
to promote and oversee the smooth operation of the payment systems with a view to
ensuring financial stability;
to issue banknotes and coins as legal tender to be used on the territory of Romania;
to set the exchange rate regime and to oversee its observance;
to manage the international reserves of Romania.
The National Bank of Romania is the sole institution authorised to issue currency, in the form of
banknotes and coins to be used as legal tender in Romania, based on a currency issue programme
drafted in terms of the real needs of money circulation.
The central bank is the sole institution vested with licensing and regulatory powers in the banking
field, being responsible for prudential supervision of credit institutions in order to ensure the
smooth functioning and viability of the banking system.
The National Bank of Romania keeps in its records the general current account of the State
Treasury opened on behalf of the Ministry of Public Finance. In keeping with the law, direct
financing of public institutions by the monetary authority and privileged access of the public
sector to financial institutions' resources are prohibited.
The descision-making bodies and organization of NBR
The National Bank of Romania is run by the Board of Directors. The chairman of the Board is the
Governor of the NBR.
In the pursuit of its mandate, the NBR has a strong territorial bank network made up of 4 regional
branches and 16 agencies.
The brief history of NBR
The National Bank of Romania was founded on 17 April 1880, being the 16th central bank in the
world from a historical perspective.
Ion I. Cmpineanu was designated as the first governor of the National Bank of Romania, but the
undisputed founder of the central bank was Eugeniu Carada.
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The NBR has its headquarters in 25 Lipscani Street, an architectural landmark erected during
1882 - 1889 and in 8 Doamnei Street, a neoclassical style building whose construction works
began during 1938 - 1950. The NBR carries on its activity in Chrissoveloni Palace as well, which
is located nearby, at 8 Lipscani Street.
2.2. History

In 1916, in the wake of the Central Powers' invasion, the valuables of the National Bank
of Romania, together with many other valuables (the Romanian Treasure) were sent
to Moscow for safekeeping, but were never returned (except for the Pietroasele treasure - now on
display at the National Museum of Romanian History, the numismatic collection of the National
Bank, some paintings and archives).
On July 28, 1959, an armed group of six Jewish Romanian, members of the Romanian
Communist Party apparatus (the Ioanid Gang: Alexandru Ioanid, Paul Ioanid, Igor Sevianu,
Monica Sevianu, Saa Muat and Haralambie Obedeanu) were alleged to have stolen from an
armored car of the National Bank of Romania 1,600,000 lei (about 250,000 U.S. dollars at 1959
prices). It was allegedly the most famous bank robbery in the Eastern bloc. Beyond accusations
based on various ideological guidelines, no reasons for the alleged robbery, or for the Ioanid
group to have perpetrated it, were ever given at the trial. Although the persons on trial were
accused of intending to donate the money to Zionist organizations that would send Romanian
Jews to Israel, the stolen sum was in lei, which at the time could not be exchanged for hard
currency anywhere in the world. All these aspects, together with the numerous cases of sentences
based on false accusations, have led most persons to doubt that any robbery actually took place or
that those charged with the crime committed it.

2.3. Architecture
The Old NBR Palace

The Headquarters of the National Bank of Romania in
the 1920s (Lipscani Street)
The head office of the National Bank of Romania with
the view of Lipscani Street is one of the most imposing and
massive bank edifices in Romania, nowadays a historic, art
monument, and protected as such. It was erected on the former site of the inn built by erban
Cantacuzino (1678-1688).
On 26 February 1882, architects Cassien Bernard and Albert Galleron were assigned the
task to blueprint the NBR Palace. The construction of the building in the eclectic style of the late
19th century, with some neo-classical elements, proceeded between 12 July 1884 (when the
foundation stone was laid) and June 1890 under the direction of the architect engineer Nicolae
Cerchez assisted by architect E. Bicoianu.
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The New NBR Palace
With the faade on Doamnei Street, the new wing of the NBR Palace was built during
World War II, after having laid the foundation stone back in 1937.
The construction works carried on between 1942-44 under the direction of architect Ion
Davidescu assisted by two other architects, Radu Dudescu and N. Creoiu.
The building is emblematic of the neo-classical style with rationalist influences that
prevailed in the interwar period. It impresses by the monumental granite stairs, the
huge Corinthian columns forming the faade, and the large, white marble-coated halls inside the
building.

2.4. Responsibilities of National Bank of Romania

The main tasks of the National Bank of Romania are the following:
1. to define and implement the monetary policy and the exchange rate policy;
2. to conduct the authorisation, regulation and prudential supervision of credit institutions
and to promote and oversee the smooth operation of the payment systems with a view to
ensuring financial stability;
3. to issue banknotes and coins as legal tender on the territory of Romania;
4. to set the exchange rate regime and to supervise its observance;
5. to manage the official reserves of Romania.

2.5. Responsibilities of European Central Bank

Objectives

"The primary objective of the ESCB shall be to maintain price stability".
And: "without prejudice to the objective of price stability, the ESCB shall support
the general economic policies in the Community with a view to contributing to the
achievement of the objectives of the Community as laid down in Article 2." (Treaty
article 105.1)
The objectives of the Union (Article 2 of the Treaty on European Union) are a high
level of employment and sustainable and non-inflationary growth.
Basic tasks
According to the Treaty establishing the European Community (Article 105.2), the
basic tasks are
the definition and implementation of monetary policy for the euro area;
the conduct of foreign exchange operations;
the holding and management of the official foreign reserves of the euro area
countries (portfolio management).
the promotion of the smooth operation of payment systems.

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References

- www.bnr.ro
- www.ecb.int
- www.wikipedia.org
- www.rokas.com