Stere Farmache: Bonds Market To Become Much More Important

The bonds market will become increasingly important in the near future, especially considering that lending is shrinking, according to Stere Farmache, President of the Bucharest Stock Exchange (BVB), who attended the EU-COFILE seminar organized by Alpha Bank, the National Bank of Romania (BNR) and the Romanian Banking Association (ARB) on Tuesday. He believes that "bonds will draw the attention of companies in need of financing, thus exemplify one of the leading principles of a stock exchange, the principle of achieving efficient resource allocation." However, Farmache pointed out that "this time, brokers need to take their role of financial intermediaries very seriously." "In case of a bank loan, the decision is made by a banker. On the capital market, such decisions are made by investors," Farmache explained, adding that there surely were people with liquidities on the market and they perceived the investment risk of bonds differently. In his opinion, "corporate bonds are rarely used, but they deserve the full attention of both investors and issuers, especially now, because they have the potential of becoming a very attractive instrument." The president of the Bucharest Stock Exchange also told the EU-COFILE seminar that RON-denominated bonds issued by international financial institutions could be used as collateral for the loans that commercial banks took from the National Bank of Romania. For the time being, only treasury bills are accepted as collateral for Lombard credits. Farmache stressed the need for discussions between the Central Depository and the banking system depository SaFIR, in order to create the technical framework for using bonds issued by international financial institutions as collateral for the National Bank of Romania.