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(Bloomberg) -- Romania’s central bank recommended individual solutions to rising Swiss-franc loan payments as enforcing a uniform measure for all borrowers may undermine the country’s financial and economic stability.

Lawmakers in Bucharest should avoid adopting legislation that would convert all franc loans into lei at non-market rates as discounts would saddle banks with losses of at least 3 billion lei ($764 million), Central Bank Governor Mugur Isarescu said in Bucharest on Friday. A potential conversion of franc loans may also prompt holders of loans in euros to seek protection, which would create a systemic risk, he added.

“The Swiss central bank decision was indeed a major shock and these external shocks are like earthquakes, nobody sees them coming,” Isarescu said. “The best approach is to let things settle down and try to manage them, not intervene.”

In contrast with some neighboring countries, the European Union’s second poorest member is seeking to help 75,000 borrowers withstand the impact of the stronger franc without imposing additional costs on lenders. Romania’s banking industry posted a combined 3.6 billion lei loss in the first eleven months of 2014, even before the Swiss central bank abandoned its currency ceiling against the euro in January.

Hungarian Prime Minister Viktor Orban decided last year to force banks to convert their franc mortgages into forint and Polish premier Ewa Kopacz said she expects banks to pick up the tab. Croatia capped the franc’s exchange rate at 6.39 kuna, triggering a backlash from lenders.

Insolvency Law

With leu interest rates at record lows and the slowest inflation since the fall of communism, “there is a good environment” for clients who can no longer pay their monthly installments to convert their franc or euro loans on a case-by- case basis, Isarescu said.

Romania’s parliament will resume its debate next week on potential legislation for foreign currency loans. Proposals include conversions at various exchange rates, a personal insolvency law and tax credits to shield borrowers.

Converting all franc and euro loans into lei at the rate when loan was taken would cause a 9.8 billion lei loss to banks, equivalent to 1.4 percent of Romania’s gross domestic product, according to Isarescu. Three or four banks would need “substantial capital infusions” in that case and the industry’s solvency ratio would decline to 12 percent from 17 percent, he said.

A temporary cut on the interest rate on Swiss franc loans to compensate for the exchange rate move is a potential solution for weathering the period of volatility, Isarescu said.

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net Andras Gergely, Peter Laca

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