If the Romanian companies are unable to gain market shares in the tough competition with rivals on both aforementioned markets, the gap between imports and exports widens, causing the deepening of the trade deficit and hence of the current account deficit; the latter is already at a level that raises concerns, also in terms of its financing by flows deemed stable (such as FDI and European funds), which have no longer fully covered it. Romania’s sizeable external imbalance is singular in the region in terms of size and trend. It owes to the faster growth of domestic absorption than that of domestic output, as well as to nonprice competitiveness issues of the Romanian economy manifest in certain production sectors. Relevant from this perspective is the unfavourable comparison with Czechia, Poland and Hungary, three countries where, the same as in Romania, monetary policy is managed under the inflation targeting strategy and there is a floating exchange rate in place. 3/4  BIS central bankers' speeches  Speaking of the exchange rate, I cannot help mentioning that the hasty adoption of Government Emergency Ordinance No. 114 at the end of last year contributed, through the uncertainty created on the market, among others, to an episode of moderate depreciation of the domestic currency in January 2019. Thus, the relative stability of the exchange rate of the leu, which we have all got used to, was a bit affected.
First, I will touch on the increasingly complex policy making environment given the openness of our economies. Second, I will posit three issues that we need to grapple with in considering the optimal policy mix towards achieving monetary and financial stability. Our mandates are to preserve monetary and financial stability, which are critical conditions for sustainable growth. In the pursuit of these mandates, a key consideration is the openness of our economies. While the integration of our economies with the global economy and international financial markets has yielded substantial benefits, it has also made our economies more susceptible to external shocks and spillover effects from global developments. Let me briefly touch on some of these external factors: First, global growth momentum is slowing. A key issue is how deep and prolonged the slowdown will be. A key risk is the ongoing trade tension and its impact on global trade, investment and sentiments. For many of our countries that depend heavily on international trade, the impact is already being felt in the slowdown of our exports and growth. Second, major central banks have indicated intentions, or a few have taken steps, to relax their monetary policy to support growth in an environment of low inflation. While this has helped to loosen the global financial conditions, the question is should emerging economies be prepared for another round of surge in capital inflows? This brings me to my third point.