The interest rates charged by local banks on loans should be up to 50% higher than the central bank’s monetary policy rate, according to a draft bill initiated by liberal senator Daniel Zamfir, reports local Hotnews.ro.

The central bank’s key interest rate is currently 1.75%, which would mean that banks would have to reduce their interest rates on loans to under 2.62% if this proposal were to be voted by the Parliament.

Daniel Zamfir is already famous for initiating other laws related to banks, which generated big controversies in recent years, such as the giving-in-payment law or the law on the conversion of Swiss-franc loans. The new proposal will likely determine new negative reactions from the banking sector.

“It would be dramatic if banks responded by limiting credit. This would be reflected right away in the living standard,” Adrian Vasilescu, an adviser to Romania’s National Bank governor, said about the bill.

Romania has a market economy according to the Constitution, and in the market economy prices are free, including the price of money, he added.

editor@romania-insider.com