Regulatory Frameworks for Financial Institutions in Moldova
Moldova’s National Bank plays a crucial role in regulating and supervising the country’s financial institutions. The bank’s primary goal is to ensure price stability and maintain a stable banking system.
Independence and Objectivity
The National Bank of Moldova (NBM) operates as an autonomous public legal entity, free from external influence or control. This independence allows the NBM to make decisions based on its own expertise and without undue pressure from other authorities.
Key Principles:
- The NBM shall not seek or take instructions from public authorities or any other authority.
- It shall operate in a transparent and impartial manner, ensuring fairness in its decision-making processes.
Monetary Policy
The NBM aims to maintain price stability over the medium term by keeping inflation at 5.0 percent annually with a possible deviation of ± 1.5 percentage points. This target is considered optimal for the growth and development of Moldova’s economy over the medium-term.
Objectives:
- Price stability
- Economic growth
- Development
Currency Issuance
The NBM has the exclusive right to issue banknotes and coins as legal tender, as well as commemorative and jubilee banknotes and coins for numismatic purposes. This responsibility is crucial in maintaining a stable financial system.
Key Aspects:
- Banknote and coin issuance
- Commemorative and jubilee issues
Supervision and Regulation
The NBM is responsible for licensing, supervision, and regulation of financial institutions’ activity. It aims to develop a modern regulatory framework similar to the European one, which would create prerequisites for financial institutions’ sustainable development, openness to foreign strategic investors, and recognition of Moldova’s framework equivalence by relevant foreign authorities.
Goals:
- Sustainable development
- Openness to foreign investment
- Framework recognition
Strengthening Institutional Capacity
Moldova’s National Bank has implemented measures to strengthen its institutional capacity in exercising banking supervision functions. The bank has benefited from technical assistance from the European Union through a Twinning project related to strengthening the institutional capacity in the field of banking regulation and supervision.
Key Initiatives:
- Technical assistance
- Institutional strengthening
Basel III Implementation
The NBM aims to implement Basel III requirements by transposing the European Union’s legal provisions (CRD IV/CRR package). A strategy for implementing Basel III standards is currently being developed, with a focus on identifying measures required for implementation and communicating them to the public.
Key Aspects:
- Basel III implementation
- CRD IV/CRR package
In conclusion, Moldova’s National Bank plays a crucial role in regulating and supervising financial institutions in the country. The bank’s goal is to ensure price stability and maintain a stable banking system while implementing international best practices and standards.