A number of problems experienced in the system led to the necessity of liquidating three banks and at placing another three banks under special administration. The crisis in the Moldovan banking system caused the national currency to deprecate and the inflation and budget deficit to rise. The consequences of the crisis can be alleviated, but time will be needed, and urgent measures should be taken, especially because the people’s confidence in the banking system has diminished. Such opinions were stated in a news conference at IPN staged by the Independent Think Tank “Expert-Grup”.

“Expert-Grup” executive director Adrian Lupusor said that they carried out a study of the banking crisis and established its main causes. “We have three banks that are under liquidation, while another three more important banks are under a special supervision regime. In 2015, as a result of crisis, the national currency depreciated by 25%. This led to the rise in the rate of inflation to a two-digit one, while the economy was forecast to decline by 1%. Thus, time is needed for the economy to recover,” he stated.

Adrian Lupusor noted that the budget deficit rose to 4% of the GDP. The confidence in the banking sector decreased drastically, with only 16% of the population trusting the banks to a particular extent. For comparison, the confidence level in 2014 was twice higher. Therefore, urgent steps need to be taken and a plan of action for remedying the situation should be adopted.

Alexandru Fala, programs director at “Expert-Grup”, said the balance of deposits in lei diminished last year. “In the second half of 2015, the balance of deposits in lei fell due to the depreciation of the national currency and the orientation to deposits in foreign currency. But the deposits in foreign currency are also declining. In difficult economic conditions and with a harsher monetary policy, the lending activity diminishes,” he explained.

According to the economist, it is now seen that the banks need greater liquidity and have to purchase it from the National Bank of Moldova. Until 2015, this wasn’t witnessed in the banking system of Moldova. It was usually the central bank that borrowed money from banks.

“Following the initiation of the liquidation of three banks, the assets were concentrated mainly in another three banks and this thing should be analyzed by the state institutions because particular risks can be faced. If a number of legislative amendments are not made and particular steps are not taken, new dubious transactions will be performed. Also, the banks can experience a shortage of liquidity,” stated Alexandru Fala.

“Expert-Grup” is committed to monitoring authorities’ actions aimed at stabilizing the banking sector and at preventing similar crisis in the future.