The previous years and in the recent past, lending to the population has expanded rapidly, with both consumption loans and mortgages growing, said the governor of the National Bank of Moldova (NBM) Octavian Armașu. He noted that in such conditions risks of over-indebtedness of the population appear and this is also confirmed by the petitions and complaints of citizens, IPN reports.
“We do not yet have countrywide statistics and it is actually rather hard to determine this index. But it is more important for the authorities to intervene in this process and to prevent over-indebtedness. This way, the National Bank, together with the National Commission for Financial Markets, worked out responsible, prudent lending regulations by which particular macro-prudential indicators will be introduced to limit citizens’ indebtedness. I think the implementation of these regulations can mostly solve this problem of over-indebtedness,” the governor stated in a joint interview for the press.
Octavian Armașu noted that the NBM took measures to support the economy during the pandemic, when the aggregate demand was very small and the population’s consumption declined dramatically. The Bank relaxed the monetary policy. “We decreased the base rate to a historical low. We diminished the mandatory reserves and provided the banks with additional liquidity for these to be able to support the real economy by loans and the Government by purchasing state securities, financing budgetary costs this way. And this worked,” explained the government.
In the second half of 2021, the economy started to recover and the recovery had a too fast pace. That’s why the NBM in April started to implement a more restrictive policy. Step by step, the monetary policy was restricted so as to respond to the inflation shocks existing on the market, generated by the rise in food prices at international level and by the increase in fuel prices.
“We increased the base rate and the mandatory foreign exchange reserves so as to stop the propagation of inflation in a chain in the economy following the imported shocks. By toughening up the monetary policy, the NMB also aims to ensure greater financial stability by discouraging lending, primarily consumption loans, for reducing the aggregate demand, and by increasing the interest rates on deposits. So, by our monetary policy, we encourage the banks to raise the rates on deposits so that the people save more money. We already see the effects. We see that the interest rates on loans grew. The rates on deposits also grow and we would like the banks to maintain this trend,” said Octavian Armașu.
