The analysis of the main reforms in the financial sector of Moldova, conducted by Expert – Grup in May - July 2017, reveals that transparency and governance remain the weak points that delay the reform of the banking sector. Compared with the last analysis of the financial sector reforms, conduced in April 2017, the author of the study, Eugen Ghileţchi noticed a relatively slow progress in the implementation of the plan for strengthening the banking industry, which focused on 7 directions of reform. In addition, the author mentioned that the approval of the new law on bank activity will improve the regulatory framework of the sector, but will not ensure the qualitative changes of the sector without their effective implementation.
The fifth edition of the Financial Monitor shows that the proportion of the recommendations implemented out of the total of 35 recommendations continues to grow, albeit insignificantly, 11 of formulated actions were implemented, 8 have not been implemented, 16 were implemented partially or are still in progress. The slow speed of implementation of the recommendations leaves the system vulnerable to a number of risks. Another major problem is the delay in reforming the National Committee for Financial Stability. According to the Law on bank recovery and resolution, the operation framework for the macro-prudential authority was to be finalized in April 2017. The delay of this reform leaves the financial system open to a significant level of risk, since the cooperation of authorities with supervision functions in the financial system is insufficient. Not lastly, the shareholder situation and transparency of certain local banks, the continuing offshorization of the banking sector, as well as the lack of investors in the share packages for sale remain to be major problems.
One of the important positive developments of the recent period refers to preparing the sector for taking on the Basel III requirements regarding the main prudential indicators. The new Law on bank activity that is to be voted in the Parliament in the final reading during the fall session, as well as the Regulation on bank activity administration framework, transpose the latest international standards and best practices in the process of bank authorization, regulation and supervision. Nevertheless, on some aspects, the national regulation exceeds the framework established by European legislation, granting rather broad prerogatives to the NBM with respect to the banks. At the same time, there is no clarity as to how the systemic risks will be assessed, as well as how the systemically important entities will be determined. In the context of the local banking crisis of 2014-2015, it is extremely important that these notions be defined as clearly as possible in order to avoid abuse and the eventuality of new government guarantees being issued without objective criteria to determine the adequacy of granting emergency credits.