Moldova cannot possibly avoid global financial crisis effects, expert

Moldova cannot possibly avoid the effects of the global financial crisis, financial expert Oleg Krasnojon told the Free Economic Zone Discussion Club. Krasnojon argued that most of the foreign investment funds which typically offer financing to transition economies, including Moldova, are now cutting investments. This will clearly have an impact on economic growth, especially for the economies which strongly need investment in order to modernize and absorb European standards, like Moldova is. Concerning the impact on the financial and banking sector, Krasnojon believes it will not be significant, because the financial market of Moldova is not connected to the international financial flows, and the capital held by the domestic banks is mostly composed of people's savings. At the same time, he remarked that a great part of this capital is made up of remittances and this money could be withdrawn at a certain point. That is why it would be much safer to have the National Bank decrease the reserve requirements and raise the guarantee on bank deposits (which is currently fixed at 4,500 lei), Krasnojon insisted. Meanwhile, Senior Deputy Prime Minister Igor Dodon, who is also Minister of Economy and Trade, has said in an interview he sees no reason for raising the guarantee on bank deposits. Talking to bankers every day over the past couple of weeks has made him confident that there's no risk for banks to go bankrupt or fail to honor their commitments. The required reserves kept by the banks with the central bank as well as the risk funds are able to cope with any problem that might appear in a crisis situation. “Raising the guarantee on bank deposits would lead to losing liquidity and increasing costs in the banking system”, Dodon said.