It is a topical issue, also relevant to Romania, because the reshaping of the relations among major global currencies – including on the background of the ECB’s recent quantitative easing – complicates the task of identifying the equilibrium exchange rate of the leu suitable for ERM II entry and thereafter for euro adoption. Technically, the adoption of the single currency as of 1 January 2019 would imply joining ERM II in 2016 H1 and the minimum two-year stay. Aside from the difficulty of setting the central parity, ERM II participation calls, however, for a certain preparedness of the economy as well, considering the risks inherently posed by a target-band regime. The need to minimise such risks and the requirement to fulfil the Maastricht criteria by the end of the second year of ERM II participation render all the more important the completion of major economic policy adjustments ahead of adopting this exchange rate regime. I am mainly referring to removing the sources of repressed inflation (the relevant example being the completion of the energy market deregulation), of quasi-fiscal deficits (by restructuring lossmaking state-owned enterprises), as well as other sources of future budgetary pressure (for instance, the unavoidable expenditures to modernise road infrastructure). There are also monetary adjustments that need to be carried out ahead of ERM II entry, namely finalising the process of bringing minimum reserve requirement ratios in line with euro area levels.
Still, Y2K was valuable to the financial community in so far as it opened our minds and increased our sensitivity for problems that nobody had encountered or envisaged before. Today, however, the situation is different and considerably more complex. The events of September 11, 2001, have clearly increased our awareness further. Looking back to the time before the attacks we seem to have tended to underestimate the probability and consequences of disruption. So what needs to be done to make sure that we do not continue to underestimate threats? How can the resilience in financial systems be improved? What are the responsibilities of each and all of us? At the level of a single financial institution objectives and measures - in terms of back up solutions, staff safety and training, testing procedures, and contingency planning in general - may have to be newly defined. A specific issue that has probably not yet received enough attention everywhere is the internal crisis management process. Establishing a crisis management committee, which coordinates decisions and communication in times of crisis, can be vital, especially for large and complex financial institutions acting globally. On top of this, crisis management needs to be tested in general. One of the simpler scenarios could be: what happens if a bank is - for whatever reason - not able to release S.W.I.F.T. messages? In addition, crisis management of a single institution must involve its customers, its business partners and peers, its service providers and its utility providers. Crisis management is therefore a very demanding activity.