As Figure 1 shows, most of that expansion has come in the past 7 years, in large part reflecting the implementation of monetary policy since the financial crisis that started in 2008. Maintaining credibility in the money we issue has been an objective of the Bank from inception. Since the early 1990s this has been pursued through an inflation targeting regime, and most of that period the tool of choice for monetary policy was interest rates. In the wake of the financial crisis and ensuing recession, however, Bank Rate was cut to a historic low of 0.5% – a level that was at the time considered to be the effective lower bound as further cuts could reduce the profitability of the banking sector and constrain the supply of credit to the economy. When more stimulus was needed, the MPC used a different tool – the Asset Purchase Facility – to deliver the needed stimulus by expanding the balance sheet using newly created central bank reserves to purchase £ billion of government bonds with a range of maturities out to 55 years. Of course what was once considered radical has become mainstream by today’s standards. Indeed other central banks have gone further as the circumstances of their economies have dictated. The European Central Bank and the Bank of Japan have stated their intention to purchase significant amounts of private sector assets, and some central banks have used their balance sheets to purchase other countries’ assets with the aim of maintaining their exchange rate at a certain level.
the act laying down the setting up of the National Bank of Romania, was published, ranking our institution among the first modern central banks. We hold dear the memory of our founding fathers. We honour them each year, but now I wish to commemorate two of them: the Prime Minister of those times, Ion C. Brătianu, whose commitment and great efforts materialized in the cornerstone law for the establishment of Romania’s central bank as a modern institution for “monetary circulation and a solid credit system” and the the artisan of the National Bank of Romania Eugeniu Carada, advisor to the Prime Minister, a man of deeds, rather than words. Eugeniu Carada took up the strategic mission to achieve the establishment of our central bank, had a clear vision of its role and set up a sound and modern credit system to foster loans and investments. By implementing modern instruments and policies for those times, the National Bank of Romania also contributed to the expansion of financial intermediation and the dissemination of financial education, since 1880 until the present day. Even though we are living difficult times, we should remember that we share a common institutional collective memory. The National Bank of Romania has been a member of the Bank for International Settlements since its establishment, on January 20, 19301, when the Final Act of the Second Hague Conference2 was adopted.