The financial system in the Republic of Moldova should become a solid source of protection for the consumers of financial services, a stability factor for public finances and a generator of credibility for the international community. No matter what political color prevails in the next government, the financial system should remain a key element of the government plan, with priorities based on the further implementation of the reforms done so far and on the crystallization of new development and modernization directions. The recommendations can be found in the Financial Monitor that was presented by the Independent Think Tank “Expert-Grup” on April 16, IPN reports.
The experts said the current tendencies in the financial system are greatly determined by the reforms done in the banking sector after the crisis of 2014-2015. Launched in the form of stabilization measures aimed, among others, at resuming the cooperation with the main foreign partners, these were continued as actions to review and adjust the legislation. The government assumed a large part of these actions under the Memorandum with the IMF, which laid special emphasis on the ensuring of bank shareholder transparency and strengthening of the corporate governance mechanism. Also, the switchover to the regulatory and supervision standards Basel III was launched according to the calendar negotiated as part of the Association Agreement with the EU and envisions the meeting of new requirements concerning capital adequacy, transactions with affiliates, risk assessment and management, regime of penalties and others.
According to “Expert-Grup”, the current situation in the financial system is appropriate for continuing the development and modernization reforms. This way, unlike the situation ten years ago, the largest part of the system is controlled by foreign financial groups or banks. Famous shareholders with experience at regional and even international levels, such as Banca Transilvania at BC Victoriabank, the European Bank for Reconstruction and Development at BC Moldova Agroindbank and Intesa Sanpaolo at BC Eximbank, entered the Moldovan market. In fact, the macroeconomic conditions also present a stable situation with an inflation rate that is within the limits of the inflation target and with lower inters rates on loans.
However, alongside these positive tendencies, there are a series of difficulties that also appeared in the period of the banking crisis. The provision of guarantees for lending to the banks that were ultimately liquidated is one of the main causes that led to the appearance of excess liquidity on the monetary market and the central bank is expected to resort to costly interventions. Moreover, these interventions have a double effect as they significantly diminish the already low interest of banks in lending to the real economy. Furthermore, the revision of lending policies and decline in population’s trust in banking institutions created preconditions for the rapid growth of the micro-financing and leasing sector. The uncontrolled growth of this segment without the strengthening of the consumer protection framework can lead to the over-indebtedness of the population, with contagion risks for the banking sector.
Given the identified constraints, the experts recommend strengthening financial institution’ capacities to satisfy the needs and meet the expectations of the business community, the Government or domestic households as regards the mobilization of capital. Also, emphasis is placed on the eradication of the black economy by extending financial inclusion, improving the system of payments and increasing the population’s financial aptitudes
