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Banking Regulations in Moldova: An Overview

Moldova has implemented a set of banking regulations to ensure the stability and security of its financial system. In this article, we will provide an overview of these regulations, including capital and own funds requirements, liquidity requirements, and the implementation of the Basel III framework.

Capital Requirements

The initial capital requirement for banks in Moldova is MDL 100 million (approximately EUR 5 million). This minimum capital level serves as a foundation for further regulatory requirements.

Own Funds Requirements

Banks must maintain an adequate level of their own funds, which may not fall below the initial capital level. This ensures that banks have sufficient resources to absorb potential losses and maintain stability in times of financial stress.

Capital Buffers and Adequacy Ratios

Minimum levels of own fund’s adequacy ratios and capital buffers are also required to be maintained by banks. These requirements help ensure that banks have sufficient capital to cover potential risks and maintain their financial health.

Implementation of Basel III Framework

The National Bank of Moldova (NBM) has introduced regulations to implement the Basel III framework, which includes:

  • Risk-Weighted Assets: Banks are required to calculate risk-weighted assets based on their credit, market, and operational risks.
  • Credit Risk Mitigation Techniques: Banks must use techniques such as collateralization, guarantees, and credit derivatives to mitigate credit risk.
  • Operational Risk Treatment: Banks must have policies and procedures in place to identify, assess, monitor, and control operational risks.
  • Market Risk Treatment: Banks are required to calculate and manage market risk exposure.
  • Settlement/Delivery Risk Treatment: Banks must ensure that they have adequate controls in place to manage settlement/delivery risks.

Risk Management Framework

Banks are required to maintain a risk management framework that includes policies and procedures for managing, identifying, assessing, monitoring, and controlling risks. This helps ensure that banks can effectively identify and mitigate potential risks and maintain their financial stability.

Deviation from Basel III Framework

Moldova has implemented the Basel III framework with some deviations, including:

  • Leapfrogging from Basel II to Basel III: Moldova skipped implementing Basel II in favor of directly adopting Basel III.
  • Aligning with European CRD IV/CRR framework: Moldova’s banking regulations are aligned with the European Capital Requirements Directive (CRD IV) and the Capital Requirements Regulation (CRR).
  • Introducing new requirements for risk-weighted assets, credit risk mitigation techniques, operational risk treatment, market risk treatment, and settlement/delivery risk treatment: Moldova has introduced additional requirements to strengthen its banking regulations.