Silviu Cerna

Economist, Professor, Ph.D., the West University of Timișoara, expert in monetary policy and banking systems

Modern Monetary Theory and Its Poisonous Implications

The Modern Monetary Theory (MMT) is often mentioned in the latest economic debates, especially in the USA, where it is supported by some (left-wing) candidates of the Democratic Party to the Presidential elections of 2020 and their economic advisers. Recently, a first edition of a macroeconomics manual with over 600 pages, where this theory is presented, was rapidly sold out. The explanation for this bookstore success resides in the fact that the new theory seems to provide governments with economic policy tools susceptible to be used when the interest rates are very low or even zero and will, probably, remain so in the near future. More

Romanian Stabilization in the 1920s and the Missing Gold Reserves

Silviu Cerna

Despite ending the First World War as one of the victors and, as a consequence, having doubled its territory and population and reaching its political goal, i.e. the union of the territories with the majority of the Romanian population in the form of a national state, Greater Romania was, economically, severely affected by the war. According to certain estimates, the war has caused ROL 31 billion worth of damages (Romanian Leu). In addition, the war triggered the disruption of the economic activity, trade deficits in relations with foreign markets, financial chaos and inflation. More

“Are Central Banks Literally Independent?”

Silviu Cerna, Ion Pohoață

The independence of the central banks – mysterious or miraculous entities in the eyes of masses – is practically an inexhaustible topic for scholars-economists and political scientists, as well as for business-persons and policy-makers. Still, the ultimate bill-payer of all institutional settings and governance organizations is the consumer-citizen. For this character this bell (of the debate) tolls. More

Economic Sovereignty: Between Slogans and Realities

Silviu Cerna

In the speeches of some politicians and in the writings of some Romanian journalists and economists, the slogan of economic sovereignty is often present. The economic conception expressed by this phrase is obviously inspired by the xenophobic-autarchic model of the Communist economy, but it is also reminiscent of the “Through Ourselves” policy applied in the interwar period. In order to be economically independent, Romania must come out of the world in one way or another! The problem is that in the face of globalization, leaving the world can have serious consequences. Ultimately, autarky means reducing imports and limiting foreign capital inflows, which impedes economic development and makes economic sovereignty impossible. More

Euro Adoption: Chance and Challenge for Romania

Silviu Cerna

Like the other Central and Eastern European countries, Romania committed itself to adopting the euro as soon as it will meet the necessary conditions. The candidates have, however, a considerably large margin of manoeuvre in determining the moment when they will adopt the euro. Especially two accession criteria to the Monetary Union – harmonization of the legal framework with the Eurozone standards and the prior participation in the European Exchange Rate Mechanism II (ERM) – are entirely under the sovereign control of the states. On the other hand, the institutions of the Eurozone have an important role in the euro adoption process, notably when it comes to assessing the extent to which a certain country is ready to participate in the ERM II. More

The Economic Consequences of the Russian-Ukrainian War

Silviu Cerna

The Russian invasion in Ukraine marked a new war in Europe, which started four months ago and whose end is not yet in sight. The longer the conflict lasts, the larger the threats to world peace will become. The Western world’s reaction was to apply severe economic sanctions, to impose penalties, mainly as deterrence. Even though it is too early to see the end of this war, some economic consequences are already visible.When Ukraine was invaded by the Russian army, the world’s economy was already in a huge stagflation, not comparable to the one from 1973-1974. This economic shock was strong enough to impact the demand in different sectors: fossil energy (oil, gas and coal), food (corn), chemical fertilizers (based on potassium and nitrogen) and industrial raw materials (nickel, titanium). Those goods accounted for a good percentage of the exports of Russia and Ukraine, and the war led to an increase in the world prices for those goods. More

Political Uncertainty and Inflation

Silviu Cerna

Recent political events in Romania (the removal of some ministers, the dissolution of the ruling coalition, the dismissal of the government by a motion of no confidence etc.) created a great deal of uncertainty regarding fiscal, monetary and legislative policy. The measures promised or claimed by politicians in response to the powerful impact of the energy crisis on the Romanian economy and society, which have already been affected by the COVID-19 pandemic, increase this uncertainty. In particular, uncertainty concerns the nature, magnitude, and timing of financial support measures for the population and businesses, the monetary policy measures projected by the National Bank for the inflation slowdown, absorption of EU funds, sustainability of public debt etc. Many public voices, from journalists to analysts of credit rating agencies and international financial institutions, warned that this uncertainty about the conduct of economic policy is affecting the behavior of businesses and the population in terms of production and consumption expenditure, investments, new jobs creation etc. More

Protectionism: “Fairness” Is the New “Freedom”

Silviu Cerna

Lately, the media and the Parliament have triggered debates on adopting protectionist measures: granting subsidies, “51% Romanian goods” quotas in supermarkets, restricting the selling of land to foreigners, closing large shops during the weekend, etc. The arguments rely on the need to support domestic capital, to secure food and/or energy, bailing out even loss making companies and avoiding unemployment. More

The Banks in the Economy

Silviu Cerna

The recent legislative initiative, called “Resolution Agency Law”, gave rise to intense discussions, which have not lacked in demagoguery and populist, anti-capitalist and anti-Western overtones. Beyond the latent dangers posed by the underlying substance of these tendencies, the major problem is that the project “may generate a systemic risk in the banking sector, inducing risks and endangering the financial sector stability with implications for the entire economy” (EC, Romania Country Report 2016, Brussels, 26.2.2016, p. 2-3). More

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