Financial services are oftentimes perceived to fall within a semi-obscure area for majority of citizens. Therefore, establishing a set of objective rules and efficient practices for consumers and service providers in the financial area is crucial for consolidating a fully functioning market economy. The economic aspects, including financial services, play a pivotal role in the implementation of the Association Agreement between Moldova and the EU, especially considering that if implemented successfully, in the long run, they can bring substantial economic benefits for citizens.
The current analysis will focus on the progress recorded by authorities, regarding select provisions of the Association Agreement in the financial sector, with a special focus on the draft law amending the Law on currency regulation.
The National Bank of Moldova is the responsible institution in charge of oversight and regulation of banks, and alongside the National Commission for Financial Markets (as well as some other authorities, depending on the sector), ensures proper implementation of financial sector provisions from the Association Agreement. The fundamental objective of the National Bank, as provided by law, is ensuring price stability. In order to successfully attain this objective, and also to accomplish the commitment that stem from the national plans and strategies, the National Bank has to cooperate with state authorities.
It is important to mention that the National Bank has displayed a firm commitment regarding the implementation of the Association Agreement, transposing directives and regulations it is in charge of. The National Bank is the sole institution or is the institution with the first responsibility, in charge of 7 actions for amending the legislation, for aligning it with the acquis communautaire. Out of the planned legislative actions, 4 acts have been finalized, 1 directive has been partially transposed, and 2 more acts will be transposed in the near future.
In this context, on the 08.04.2016, the Parliament adopted in the first reading, draft law amending the Law on currency regulation that comes out of the Association Agreement commitments, namely paragraph 267 of the National Action plan for implementation of the Moldova-EU Association Agreement. These amendments are intended to loosen the currency regulations in order to improve the legal framework in the area, and also to stimulate the development of this sector. Some of these measures are: liberalization of currency operations that need to receive the authorization of the National Bank, liberalization among the loans issued by banks in favor of nonresidents and amending the conditions for notifying the national bank regarding certain loan groups. The draft law provides a set of amendments regarding the activity of currency exchange units, namely: allowing these units to modify the exchange rate multiple times throughout the day and providing the clients of currency exchange units with the right to ask for annulment of the currency exchange operation. Finally yet important, the draft law contains a new set of safeguarding measures that will allow the National Bank to implement additional tools during a systemic financial crisis. The implications and the risks of the above mentioned amendments are described in the second part of the report.
In conclusion, the analysis sets out a list of recommendations for improving the draft law adopted by the Parliament in first reading, including the following:
– diminishing the threshold of loans that do not require notification of the National Bank, from the current proposed level of 50,000€ to10,000€;
– establish additional provisions that will ensure that the amendments allowing currency exchange units to modify the exchange rate multiple times during the day will not lead to hidden agreements for manipulating the exchange rates;
– in terms of deposit guarantee schemes, increasing the coverage level for natural persons, and extending this provision for legal persons, in order to increase people’s trust in the banking system.
Author: Eugen Ghilețchi, [email protected]Fullscreen Mode