Pace of reforms in banking sector must be maintained - Moldovan experts say

Chisinau, 26 January /MOLDPRES/- Monitoring recent reforms in the banking sector had highlighted a number of developments to increase resistance in the banking sector, but the recorded performances should not relax authorities on constant challenges arising from the financial sector. Authors of a study released today by the Expert-Grup centre reached this conclusion.

Signing of the memorandum with the International Monetary Fund, changes in ownership and management of the largest banks, converting guarantee in public debt, elaboration of the draft law on preventing and combating money laundering and financing of terrorism are main actions that marked dynamics of the financial and banking system during the period. These actions include the approval and implementation of new framework on financial stability and adoption of law on central depository.

They helped strengthen the legal framework needed to safeguard financial stability in Moldova, protect the public interest to ensure sound and prudent management of financial sector entities, experts said. In their opinion, the actions have resulted in strengthening the national legal framework on transparency and quality of bank shareholders that had the effect of enhancing resilience of the banking sector and removing the deficiencies that made possible the 2014 banking crisis.

The study authors point out that the banking sector remains exposed to vulnerabilities that could compromise the sustainability of reforms. In this regard, the experts point to the need to strictly meet the commitments to IMF in order not to endanger providing foreign financial support. A strategic approach is necessary for share packages of at least two banks and three insurance companies offered for sale. They note that time limit of selling shares should be extended in order to provide enough time for analysis from qualified investors.

At the same time, it is important to empower the Administration Council of the National Commission of Financial Market to appoint a new head, the study also reads.  Referring to conversion of guarantees in public debt, the experts warn on the danger caused by the possibility to cancel the law. They also insist on the need to avoid situations of issuing securities without coverage or a clear plan of resource use in future in order to remove the levers by which banking frauds or errors may turn into state debt.

According to Expert-Grup centre, another important aspect is to set in the national legal framework in the context of preventing and combating money laundering and financing terrorism the provisions related to creation of a single national registry of beneficiaries. This could lead to diminishing offshore in the national economy and would lay foundation for transparent economic activity.

(Reporter V. Bercu, editor M. Jantovan)