To a considerable degree, the banks’ high CDS spreads could be a consequence of their enormous borrowings on the global markets, together with the unusual circumstances currently reigning in the financial markets. The Icelandic banks’ CDS spreads now range from 4% to over 6%. Well-known international banks must also tolerate high premia, even though they are lower than those in Iceland. For example, the American investment bank Bear Stearns has paid a premium of 3½% and over on five-year CDS agreements, and Lehman Brothers and Merrill Lynch have been charged 2% and over – not far from the premia charged to Landsbanki until very recently. The CDS spreads of many large, well-known international banks have risen by 0.4 – 0.8% so far this year. It may be mentioned that the proptional increase of the CDS spreads of the Icelandic banks over the last two years has not been greater than of many other and better known banks. This fact does not, however, improve their position in the captial markets. The CDS spreads charged to Icelandic banks mean that they do not currently have access to international funding on acceptable terms. The pricing of international loans is based on CDS spreads, especially if liquidity is limited in underlying bonds. This is the case even though the CDS market is imperfect and non-transparent and quotes differ significantly in the market. It is nonetheless used as a reference.
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.