Financial Monitor #2: analysis of main reforms undertaken in Moldova's financial sector (April - July 2016)

Publishing date: Thursday, 04 August 2016
Views: 14043

The Independent Think-Tank Expert-Grup has assessed the main reform actions within Moldova’s financial banking sector during April – July 2016 and noted some signs of improvement.

Executive summary

Experts warn about the still existing shortcomings in transparency and quality of bank shareholders, insufficient intervention tools from the National Bank of Moldova, and the slow progress in investigating the banking fraud and the subsequent return of embezzled funds.

The Government’s main achievements in the recent months include the implementation of the actions related to financial-banking sector within the Roadmap for priority reforms, which are essential for resuming the foreign financial assistance. In this context, two draft laws – (1) the Law on Central Depositary for Securities and (2) the Law on banks recovery and stability  - have been adopted in fast terms, despite their complexity and their major implication for the financial industry.

Another notable progress was IMF’s announcement on a Staff-Level agreement reached with the Moldovan Authorities on economic and financial policies. This should offer a certain amount of confidence for all external partners regarding the economic and political environment in the country.

Nevertheless, the measures undertaken so far are not sufficient to ensure an efficient financial system, nor for preventing similar crises in the future. There are still uncertainties regarding the quality of assets in the banking sector, and the situation at the three major banks placed under special oversight. Also, the main recommendation from IMF has not been fully achieved –improving the quality and transparency of banks’ shareholders, given the doubts that exist over final beneficiaries on several stakes.

Another concern hangs on the reform process of the National Committee for Financial Stability (NCFS) – the body responsible for coordinating the institutions responsible for the stability of the banking sector, which currently faces serious governance issues, caused by political affiliation and unclear mandate, transforming itself into a part of the problem rather than a solution. Despite the Government’s support and approval for reforming the NCFS, there are no clear actions taken so far.

In order to continue and accelerate the reform pace in the financial-banking sector, Expert-Grup recommends the following measures:

  1. Complete and qualitative execution of the provisions related to financial banking sector within the priority reform Roadmap;
  2. Ensure a thorough and transparent investigation on the banking fraud, which shall expand in time and therefore facilitate the recovery of misappropriated funds;
  3. Ensure compliance with the anti-money laundering requirements and highlight all countries and territories that do not implement in their national legislation the international standard in transparency, or are classified as offshore jurisdictions.

In addition, Expert-Grup restates its previous recommendations, including:

  1. Removing any possible interactions between “offshore” zones and commercial banks, as this was an essential element in misappropriating the funds from the liquidated banks,
  2. Reforming the bank deposit insurance framework, including the increase of deposit insurance limit up to at least 12 average monthly salaries (approx. 60,000 MDL),
  3. Increasing the prudential requirements in order to eliminate the toxis assets from the banking sector,
  4. Reforming the National Committee for Financial Stability, so that its responsibilities do not overlap with those of NBM and NCFM
  5. Accelerating the implementation pace of th Association Agreement provisions in terms of financial services.


Read full report in English



This document is with the financial support of the Netherlands Embassy in Bucharest. Opinions expressed in this document belong to the authors and do not necessarily express the opinions of the donors.


Tags: Natalia Chitii


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