INTERNATIONAL RESERVES, GUARANTEE THAT SUPPORTS ROMANIA'S ECONOMIC DEVELOPMENT

Medar Lucian-Ion and Irina-Elena Chirtoc
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Medar Lucian-Ion: “CONSTANTIN BRANCUSI” UNIVERSITY OF TARGU JIU, ROMANIA
Irina-Elena Chirtoc: “CONSTANTIN BRANCUSI” UNIVERSITY OF TARGU JIU, ROMANIA

Annals - Economy Series, 2014, vol. 5, 26-32

Abstract: Aggregate demand in our country far exceeds the ability of the economy to produce goods and services. The gap between total demand for goods and services on the one hand and economic status, on the other hand stands out primarily by the continuing need for funds to cover the budget deficit. The Lack of foreign investors, poor development of capital market and non-involvement of credit institutions to support economic development leads the Romanian state to borrow regularly on international money market. Guarantor of the country for these loans is the reserve fund managed by the central bank of the state. Trade deficits and foreign borrowing are two components of the same problems. As the state borrows more from the international financial markets the higher is the trade deficit. A national initiative on facilities development companies with export production and aggregate demand for domestic products, can lead to lower imports. Increasing the fund's reserves and activation may be one of the solutions required to support economic development. Through this study we try to discover the role of the reserve fund and other sources of economic development.

Keywords: international reserves; liquidity; reserve currency (search for similar items in EconPapers)
Date: 2014
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