MOLDOVA: National Bank Tightens Grip on Financial Institutions Amid Rising Regulatory Concerns
Strengthening Regulatory Framework for Commercial Banks
The National Bank of Moldova has taken steps to strengthen its regulatory framework governing the activities of commercial banks in a bid to ensure stability in the country’s financial sector. This move comes amid growing concerns over compliance with international standards and best practices.
Surveillance Mechanism Established
According to sources, the National Bank has established a comprehensive surveillance mechanism for banking activity. This includes specific requirements outlined in normative acts, which are regularly reviewed and updated to align with legal provisions, international principles, and recommendations from organizations such as the Basel Committee on Banking Supervision and the European Union.
Key Areas of Focus
The key areas of focus include:
- Authorization criteria for banks
- Capital requirements
- Owner quotas
- Administrative standards
Additionally, the National Bank emphasizes the importance of internal control systems, including procedures for preventing and combating money laundering.
Banking Supervision Function
The banking supervision function aims to ensure a smooth functioning financial system in Moldova, based on a strong and competitive banking sector that prioritizes market relations and risk prevention. To achieve this goal, the National Bank conducts both off-site and on-site inspections of licensed banks.
Off-Site Monitoring
Off-site monitoring involves analyzing financial statements and prudential reports submitted by banks, as well as information gathered from regular and thematic inspections, external audits, and other sources. This helps identify potential risks and problems early on, allowing for prompt corrective action.
On-Site Inspections
On-site inspections, conducted annually, aim to assess a bank’s risk level and management capabilities. During these inspections, the National Bank evaluates each bank’s overall financial situation, causes of instability, and factors affecting its safety.
Interrelationship between Off-Site and On-Site Supervision
The interrelationship between off-site and on-site supervision ensures that information gathered during off-site monitoring informs the objectives and focus areas for on-site inspections. The National Bank’s efforts to strengthen banking regulation and supervision have been welcomed by industry stakeholders, who see it as a vital step towards maintaining financial stability in Moldova.
Conclusion
The National Bank of Moldova’s strengthened regulatory framework and supervisory measures aim to ensure a stable and competitive banking sector that prioritizes market relations and risk prevention. The efforts are designed to promote a smooth functioning financial system in Moldova, and industry stakeholders have welcomed the move as an important step towards maintaining financial stability in the country.