NBM adviser Alexandru Savva said the single Central Securities Depository (CSD), which was created in the Republic of Moldova five years ago, is necessary for a developed market. It is a nucleus that builds connections between financial institutions, being necessary for payments, and this nucleus is created at the National Bank of Moldova. It goes to a known system – automated interbank payment system. The Depository also plays a central role in the transfer of financial instruments, not of money, but of securities, which are issued by the state, through the Ministry of Finance, to joint stock companies, IPN reports.
“The single Depository creates them by simply adding them to the state register and this financial instrument can be later traded, sold. So, the initial moment is the creation by the Depository of securities and their introduction into the circuit, for sale. Secondly, by these bridges with all the entities from the market, all the financial institutions, it is easy and convenient to make transfers from one person to another,” Alexandru Savva stated in a podcast of the series “Give Sense to Money” which was presented by the NBM.
According to him, the CSD solved a number of problems. First of all, it centralized functions that in 2015-2016 were divided between about ten entities and concentrates this information in one institution. Secondly, it created connections with different entities that are of interest for the NBM, such as banks, investment societies, payment systems, the Ministry of Finance.
“In 2015, there were ten institutions that fulfilled these functions and each of them had different internal capacities, different more or less developed systems. But there was one problem – they weren’t connected somehow. The major role of the Depository was to maintain these connections. The third very important key aspect is that a very sophisticated and very developed information system that enables to perform practically any range of operations with financial instruments was implemented. It enabled to maintain the operational needs of the previous period and to then go on and develop them,” said the NBM adviser.
Alexandru Savva noted that there are a number of categories of entities classed as clients of the Depository. In terms of turnover and interaction with this entity, the NBM and the MF are the main ones in the first category. They are the largest clients of the Depository through the issues of state securities (SSs) and of bonds issued by the NBM. The second category includes the joint stick companies of the Republic of Moldova, which number about 2,000. The other category includes the private individuals.
“Anyone who wants to invest in a financial instrument will interact with the Depository at a particular stage. This interaction can be direct or through the agency of a bank or a broker, but it will exist,” said Alexandru Savva.
