Privatization in Romania — the case for financial institutions

Abstract

In a book published in 1991 by the Romanian Academy of Sciences — The National Institute for Economic Research, “The Romanian Economy — the 20th Century”, what is usually called today “the transition” is defined as “the new transition to the market economy” in a comprehensive attempt to elaborate a theory of one of the most challenging processes of this century. The “new transition” because it is assumed that most of the Central and East European countries had embarked on the building of a market economy before the communist regime (with the possible exception of Russia and some other countries emerging out of the former USSR) and because most of those countries underwent also another transition, from the market economic system to the centrally planned economy. In Romania it has been repeatedly argued that perhaps the best way is to study the centralization measures and to use the reverse process. For example, the socialist transition started with taking control of the banking sector and the central bank, monetary reform and stabilization, nationalization and collectivization, and it would be wise now to concentrate on the same issues, that is stabilization, decontrol and demonopolization of banking and financial services, privatization and development of capital markets. Others argued that it is the history of the natural development of the socio-economic system before communism that is relevant for a sound approach to systemic change. Anyhow, it is worth mentioning that the most comprehensive attempt to define the Romanian transition (and the transition in general) has focused on policy-making, trying to advise on a package of measures to be followed by the government and not on developing a more theoretical approach.