Commission Report 2002 (Romania)

• Progress since the last Regular Report
• Overall assessment
• Conclusion

Chapter 11: Economic and Monetary Union

Progress since the last Regular Report

A detailed assessment of the various aspects of Romania`s economic policy has been given above, in the Chapter discussing the economic criteria (B-2). Therefore, the present section is limited to a discussion of those aspects of the Economic and Monetary Union acquis - as defined by Title VII of the EC Treaty and the other relevant texts - which candidate countries should implement before accession, i.e. the prohibition of direct public sector financing by the central bank, the prohibition of privileged access of the public sector to financial institutions and the independence of the national central bank. As to the process of liberalisation of capital movements, upon the completion of which compliance with the EMU acquis is conditional, this aspect has been covered above, in the section on Chapter 4 - Free movement of capital.

Since the last Regular Report, Romania has made only limited progress with adopting the EMU-related acquis.

As regards the prohibition of direct public sector financing by the central bank, no legislative progress can be reported - although no recourse to such financing has been made since 2000.

Similarly, no progress was made during the reporting period with the prohibition of privileged access of the public sector to financial institutions.

Concerning the independence of the central bank, an Emergency Ordinance of October 2001 amended the Statutes of the National Bank of Romania and explicitly discharged the Bank`s directors from civil or criminal liability for supervisory actions taken in good faith.

Overall assessment

Romania will participate in EMU upon accession with the status of a country with a derogation under Article 122 of the EC Treaty. It will need to implement the necessary changes to its institutional and legal framework by the date of accession.

As regards the prohibition of direct public sector financing by the central bank, legislative amendments are necessary to fully align with the acquis, particularly as regards the purchase of government securities. The Romanian authorities have agreed a timetable for the modification of the relevant statutory provisions by the end of 2004.

Romania also needs to further align its legislation with the provisions of the acquis prohibiting privileged access of public sector authorities to financial institutions. Romania is to amend legislation regarding the functioning of the deposit guarantee fund in the banking system by the end of 2004.

In the area of central bank independence, further alignment is needed in order to make the legislative framework compliant with the acquis. Romania has identified the legal texts requiring amendment and has approved a timetable for their modification by the end of 2004.

Conclusion

In its 1997 Opinion, the Commission concluded that it was premature to judge if Romania would be in a position, by the time of accession, to participate in the euro area; that would depend on a successful structural transformation permitting it to attain and adhere permanently to the convergence criteria, though these were not a condition of accession. The Commission also pointed out that Romania's legislation was not fully compatible with EC rules and that monetary and exchange rate policies still had to show a significant stability oriented record.

Since the Opinion, while overall policy has stabilised legislative alignment has remained limited.

Negotiations on this chapter have been provisionally closed. Romania has not requested any transitional arrangement. Romania is generally meeting the commitments it has made in the accession negotiations in this field.

Romania should focus further efforts on pursuing the alignment of its legislation with the acquis in this area.

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