The independent analytical centre suggests deposit guarantee fund increase by 2020 in Moldova

Chisinau, 26 January /MOLDPRES/ – The Independent Analytical Centre Expert-Grup suggests a gradual increase of deposit guarantee fund to the value of at least 120 thousand lei by 2020. It is one of the proposals containing within study “How we can reform the deposit guarantee fund system – solution for increase of trust in banking system”, presented in a press conference today.

"Deposit Guarantee Fund should have a more important role in preventing crises and maintaining financial stability, being able to intervene in a bank before it can be declared bankrupt," said experts. Currently, the coverage of individuals' deposits in the banking system is 6,000 lei, maximum level established in 2010, before the banking crisis.

The fund for guaranteeing deposits increased from 127 million lei in 2010, to 315 million lei in 2016.

"In the last ten years, six banks were liquidated in Moldova. The bankruptcy of banks has occurred anytime and anywhere, we can not escape from it. Therefore, the protection of depositors becomes an essential tool in maintaining of the financial stability, both individual as well as collective system as a whole," said economist Dumitru Pintea.

According to him, increasing the coverage of bank deposits is as imminent as to maintain confidence in the banking sector. The banking crisis of 2014 – 2015 "demonstrated an inability to safeguard national mechanism to get involved in saving three banks". "Deposit guarantee ceiling of 6,000 lei does not correspond to current realities. Also, the current model of contribution is based purely on the volume of deposits and does not take into account the risk level of banks," said Pintea.

According to the expert, it is unlikely that a crisis similar to the one two years ago to be repeated in the next period. However, in the context of national transposition of European Directive establishing a framework for the recovery and resolution of credit institutions and investment firms and setting the date of 01 January 2018, as deadline for entry into force of the instrument of bail, it is necessary to amend legislation relating to the Deposit Guarantee Fund in the banking system.

"The reform of guarantee is not just the ceiling increase. If we just raise the ceiling, we will not solve the problem, but maybe we will make it worse, it will be created an undue pressure on banks. A true reform must be more comprehensive and institutional changes should be aimed at in terms of the Deposit Protection Fund, which should play a more active role in crisis prevention," said Adrian Lupusor, executive director of Expert-Grup Centre.

The authors of the study also proposed extending protection scheme to other types of deposits of individuals, legal entities or individual businessmen. It also requires the implementation of a calculation formula of contributions to consider risk from individual banking institutions, determination of risk classes, taking into account indicators of banking representative correlated with present economic realities in Moldova.

(Reporter V. Bercu, editor M. Jantovan)