Moldovan Banking System Gets Boost from New Regulation

In a move to strengthen the country’s banking system, the Moldovan government has introduced new regulations aimed at improving supervision and resolution mechanisms.

Improved Supervision and Resolution Mechanisms

According to the Law on Improvement of Banks and Bank Resolution No. 232/2016, the National Bank of Moldova (NBM) is now empowered to exercise prudential supervision over banks operating in the country. The NBM will use a range of tools, measures, and procedures to assess compliance with prudential requirements.

Key Provisions

• Restrictions on activities for attracting deposits or other returnable funds from the population, which can only be performed by licensed banks.
• Foreign banks are prohibited from engaging in banking activities in Moldova without first obtaining a license from the NBM.
• Banks must have an original capital of at least 100 million lei.
• Bank management is responsible for ensuring prudent and reasonable management practices.

Goals and Responsibilities

The new regulations aim to enhance the stability and viability of the Moldovan banking system, while also protecting depositors and creditors. The NBM will be responsible for monitoring compliance with these requirements and taking action if necessary to ensure the continued functioning of the banking system.

Industry Expert Response

Industry experts have welcomed the move, citing it as a crucial step in boosting investor confidence in the country’s financial sector.

“The introduction of these regulations is a significant step forward for Moldova,” said Dr. Maria Popescu, an economist at the University of Chisinau. “By strengthening supervision and resolution mechanisms, the government is sending a strong signal to investors that it is committed to creating a stable and attractive environment for business.”

Implementation

The new regulations come into effect immediately, with all banks operating in Moldova required to comply with the requirements by the end of the year.

Background

Moldova’s banking sector has faced significant challenges in recent years, including high levels of non-performing loans and concerns over governance and risk management practices. The introduction of these new regulations is seen as a key step in addressing these issues and promoting a more stable and prosperous financial environment.