IS ROMANIA READY FOR THE INFLATION-TARGETING REGIME?

The author discusses here the current context of Romanian economy, as well as the macroeconomic implications of the future integration into EU and EMU, respectively. Romania is characterized by a persisting inflation which raises the question whether Romania is ready or it has to delay the introduction of the inflation-targeting regime. The analyses performed for Romania revealed the presence of fiscal dominance in the simplest form of seignorage. Together with the financial market infancy, they severely constrain the monetary policy independence. Another aspect that raises concerns about the choice of inflation targeting in Romania is the degree of dollarisation characterizing the economy. The author concludes that, presently, a monetary anchor as an anti-inflationary strategy is more facile with respect to communicability, ensuring the monetary policy transparency.