National Bank of Moldova (NBM) will create a community venture capital from 10% of the monetary bonds

The National Bank of Moldova (NBM) will create and maintain a community venture capital (the sum of the authorized capital and the general reserve fund) of 10% from the overall monetary bonds, shown in the NBM balance sheet from the end of the financial year. These changes are foreseen in a bill regarding the amendments to the Law of July 1995 regarding NBM that has to be approved by the Parliament, in order to fulfill the commitments towards the Republic of Moldova’s Government and the International Monetary Fund. On 30.09.2006 the NBM capital was MDL 200 million, the reserve fund was MDL 319.175 million, overall bonds – approx MDL 12.7 billion, including monetary bonds – MDL 9.2 billion. The bill foresees that the 50% of the NBM’s available profit will be used to fill the community venture capital, until it reaches 1-% of the NBM monetary bonds, and the remaining amount should be transferred to the income of the state budget during 15 days after receiving the external audit report of the NBM financial report. The NBM community venture capital will have a fluctuating size, with respect to the NBM monetary bonds by the end of the financial year, and the community venture capital will be made up 1/3 by the authorized capital and 2/3 from the general reserve fund. This structure is needed because of safety requirements, that make sure that the central bank has a sufficient and stable source of covering potential losses – the reserve fond, but at the same time has access to the authorized capital, that is the limit up to which NBM can individually cover the losses due to its basic activity. According to the NBM Governor, Leonid Talmaci, a central bank must maintain sufficient capital to handle any losses. According to him, capital deterioration not only limits the independence of the central bank, but also generates risks of unstable prices, affects the activity of the state fiscal agent, and also has negative impact on the reliability of the central bank.