Banks experiencing temporary liquidity problems will be able to contact the National Bank for liquidity assistance

Banks experiencing temporary liquidity problems will be able to contact the National Bank for liquidity assistance

This is provided for by the National Bank's Regulation on Emergency Liquidity Assistance, published on January 17 in Monitorul Oficial. The document establishes the principles, conditions and procedure for the provision of emergency liquidity assistance by the National Bank to legal entities of Moldova, the categories of eligible assets, the procedure for establishing and executing collateral, as well as the measures taken by the NBM in case the bank fails to return liquidity assistance in emergency situations and payment of interest due. According to the document, in order to maintain the stability of the financial system, the NBM may, at its full discretion and on the terms and conditions set by it, provide solvent and viable banks that have temporary liquidity problems with asset liquidity assistance in emergency situations. The regulation establishes that a bank that complies with the conditions stipulated by the regulation may apply to the NBM with a request for liquidity assistance in emergency situations to fulfill its obligations to depositors and other creditors, with the exception of affiliates. Liquidity assistance is provided to the bank based on the decision of the NBM Executive Committee, in national currency, at the interest rate determined on the basis of the overnight credit advantage rate prevailing on the day the decision on provision was adopted; + 2 pp Liquidity assistance is provided for a period up to 3 months with the possibility of extension, on an exceptional basis, for a period not exceeding one year from the date of provision. Assistance is provided in case the bank has exhausted all sources of liquidity, including on the interbank market and standard NBM instruments for managing liquidity in the banking system, and has adopted a reliable financing plan to solve temporary liquidity problems. The adjusted value of assets presented as collateral should cover 100% of the assistance provided and interest due. When considering a bank's application for liquidity assistance, the NBM takes into account the impact that non-provision of liquidity assistance may have on the stability of the financial system. The regulation spells out the procedure for providing liquidity assistance, establishing collateral for liquidity assistance; determining the value of assets accepted as collateral; repayment procedures for liquidity assistance and exemption from collateral or enforcement of collateral. The Regulation will begin to apply from June 30, 2020, at the same time, the Regulation on the mechanism for guaranteeing loans issued to commercial banks by the National Bank will cease to be in force. //17.01.2020 - InfoMarket.

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