The Central Bank of Romania, 140 years of history

the central bank of romania, 140 years of history Starting mid-19th century the Romanian authorities took all the steps towards the construction of the new sovereign state. One of these steps was the setting up of a central bank

The two principalities inhabited by Romanians, Moldova and Wallachia united in 1859. The young Romanian state gained its independence following a war in 1877-1878, and added Dobrogea to its territory. The third move was to set up a central bank, a crucial element in building a sovereign country. The institution came to being back in 1880 and in the following year Romania became a kingdom, which meant that the fresh state got legal personality on the world's map.

The central bank, also known as the National Bank of Romania, appeared after the promulgation of a "law on setting up a bank for accounts and circulation", published in the Official Gazette on April 17th 1880. It had an initial capital of 30 million lei, out of which a third was state capital while the other two thirds were private capital. Its most important mission was to issue banknotes accepted in various transactions and deals.

The first banknotes issued were of 20, 50, 100, 500 and 1000 lei and its first director was economist Eugeniu Carada, who linked his name to the institution's early days, its expansion all over the country and the first issues of banknotes and coins.

The bank's premises were located in downtown Bucharest, the old city center and works on these premises commenced in 1884 under the guidance of two architects from France, Albert Galleron and Charles Garnier.

Since its birth until the First World War, Romania's Central Bank offered credits and a lower discount rate. Between 1890 and 1892 the bank shifted from the silver-gold monetary standard to only gold.

The First World War threw the Romanian society in turmoil as it happened with the entire continent. The bank supported the war efforts just like the entire Romanian society but the latest developments on the battlefield forced the bank's relocation to Iasi, in northern Romania, together with the other state institutions. Romania's treasure was transferred to Moscow for safekeeping during the gloomy days of the war but was never returned by the Russians. After the end of the Great War, the central bank got the mission to integrate the economy of the Romanian state, which had taken back its provinces until then occupied by the former Russian Empire and Austria Hungary.

After the loss of its treasure to Russia and the devastating WWI, Romania's Central Bank got a new mission, to stabilize the national currency and make it convertible. The bank also fought to stabilize the currency and credit system during the big economic crisis between 1929 and 1933.

Just like in the previous war, the bank supported the country's efforts in the Second World War. During the war, the bank was forced to hide the country's treasure at the Tismana Monastery in western Romania, a lesson learnt from the first world war.

Ioan Lesenciuc curator with the Treasure Museum of the National Bank of Romania gave us a brief history of the treasure odyssey in mid-1940s.

Ioan Lesenciuc: "Romania managed to recover its gold resources between the two world wars but 1944 proved to be another bad year. After the battle of Stalingrad, the German troops had to fall back and the Soviet advance was threatening the treasure housed by the bank. In April 1944, the heavy allied bombing of the oil fields in Ploiesti and Campina, southern Romania, as well as the capital Bucharest proved to be another threat for the bank. The authorities decided to move the treasure to safer places and talks were held with representatives of two countries, Turkey and Switzerland. Turkey announced that its laws didn't allow for the transfer whereas Switzerland voiced readiness to host the treasure adding that the passing of the convoy through Central Europe, under German control at that time, wouldn't be a good idea. General Antonescu who was ruling Romania at that time said, the treasure must remain on the Romanian territory and not be divided. He gave the bank the green-light to hide the treasure wherever it considered safe."

After the end of the war, Romania entered a new era, communism, and its political regime brought major changes to the national economy, which was being controlled by the state. The national bank became state-owned and the credit system was reformed after the Soviet model. Until 1970, the taxes and interests were controlled by the state but after 1970 the bank was allowed to make its own decisions. Construction works on the new premises of the country's central bank started in 1940 and the new building was inaugurated ten years later.

After the fall of the communist regime in 1989, Romania's Central Bank resumed the prerogatives it was stripped off between 1945 and 1989.

(translated by bill)
Publicat: 2020-05-23 13:00:00
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