No one thought that it should be abandoned. And we have received a few suggestions on how we should improve upon the operation of our system. We welcome these discussions which have sharpened our own thinking in the process of debate and analysis. Whilst one or two of these idea may have some psychological but possibly only short term value, they also carry considerable downside risks of undermining confidence in a well tried system. I am also pleased to say, therefore, that we have indeed been quite thorough in our monetary reform in the past ten years. (a) Role of interest rates 36. One school of thought promoted by a group of academics in Hong Kong with specific proposals for various schemes, which I must confess I have found difficult to appreciate, seems to be based on the notion that one could maintain stability in both the exchange rate and the interest rates at the same time. No matter how these schemes are dressed up, involving insurance products, guarantees, options or other fancy derivatives of one type or another, I fear that they have very little likelihood of success. Keeping interest rates artificially down when there is capital outflow amounts to providing cheap funding to those who are shorting the currency. It requires massive intervention in the forward market or a contingent commitment of foreign reserves that even those with very large foreign reserves would find the situation difficult to hold.
Mugur Isărescu: Overcoming economic problems, the experiences of Sweden and Turkey – an inspiration for Romania? Opening speech by Mr Mugur Isărescu, Governor of the National Bank of Romania, at the conference “Overcoming economic problems, the experiences of Sweden and Turkey – an inspiration for Romania?”, Bucharest, 23 September 2013. *  *  *  Ladies and Gentlemen, Your Excellences, Distinguished Guests It is a pleasure for me to welcome you to the National Bank of Romania. I salute the presence of such a distinguished audience: Their Excellences, the Ambassadors of Sweden, Turkey, Brazil, Cyprus, Germany, the Netherlands, members of the diplomatic corps, economists, bankers, businessmen, journalists. We are honored to host this international conference: “Overcoming economic problems, the experiences of Sweden and Turkey: are these an inspiration for Romania?” The title is, I believe, self-explanatory. In today’s globalized world, learning from other countries’ experience is of utmost importance. And while it might be true that no one really learns but from his own mistakes, one can hope that some other mistakes may be avoided when learning from other people’s experiences. Why Sweden and Turkey? Before answering this question I wish to emphasize that the National Bank of Romania is open and willing to host other conferences with similar topics. And today’s conference might be considered the first of a series, involving clusters of countries with relevant interactions.