Risks to financial stability remain high in Europe, amid high debt levels in some countries and an intensification of cyberattacks; meanwhile, in Romania, it is important to continue fiscal consolidation, stated Florian Neagu—a director within the Financial Stability Department of the National Bank of Romania (NBR)—on Tuesday, at the 21st edition of the Country Risk Conference organized by Coface Romania.

“I believe the main takeaway from analyses conducted at both the global and European levels is that risks to financial stability remain high—and, in Europe, are actually on the rise. Among the types of risks affecting us globally, I would highlight two. The first is the very high level of indebtedness in many countries; even in Europe, there are highly developed nations where government debt levels have surpassed those seen after World War II. These countries now have almost no room to maneuver should another adverse development occur. Furthermore, the interest rates at which these government obligations are financed—and, by extension, the rates that will apply to financing for the real economy—are significantly higher than the rate of economic growth. Consequently, our baseline scenario anticipates that debt levels will continue to rise. This, once again, calls for a great deal of caution, as it creates numerous vulnerabilities. The second risk—which we should also monitor closely—is the cyber risk. Looking at global trends, cyberattacks against both private companies and state institutions have become so sophisticated and well-funded that they are likely backed by state actors, with the potential to cause significant impact. Therefore, this underscores the need to strengthen defense capabilities against these emerging risks,” stated Florian Neagu, according to Agerpres. Regarding Romania, the NBR official highlighted geopolitical risks—which manifest through factors such as energy prices and financial yields—as well as macroeconomic imbalances.

“In the context of Romania, there are two significant risks to financial stability. The first is geopolitical; it is having a substantial impact, whether through energy prices or financial yields, as investors seek safer havens. The second risk relates to macroeconomic imbalances. While these have eased compared to the previous year, it is crucial that this trend toward fiscal consolidation continues. Taking into account both international and domestic signals, my advice to companies would be to take advantage of any breathing room to get their balance sheets in the best possible shape. In fact, on my way here, I conducted an interesting exercise: I examined every company that has operated in the Romanian economy over the last 30 years—one by one—and I can tell you that very few managed to keep their financial situation in good order,” stated Florian Neagu.

According to him, financial health indicators within Romania’s banking sector are, on average, stronger than the European Union average. “Looking at the health indicators of the banking sector—and I say ‘on average’ because averages often mask extreme situations—the health of the Romanian banking sector is, on the whole, better than the European Union average. Consequently, we expect the banking sector to remain part of the solution and to be capable of supporting the financing of both the real economy and government needs, provided it is allowed to fulfill this role,” added Florian Neagu.