Central banks play a decisive role in overcoming crises and are on the first line of defense of the economy - Octavian Armasu.
The President of the National Bank of Moldova said this during a roundtable on Wednesday on the topic “The Role of Central Banks in the Modernization of Society and Their Challenges in Developing Economies”. The head of the NBM noted that along with other state institutions, the central bank plays an important role in ensuring the financial and economic stability of the country. However, in developing countries, the actions of central banks require a special approach in order to competently cope with the many changes and shocks. Monetary policy decisions are one form of crisis response. “Unlike fiscal measures, which appear only after a certain time (about a year) and often have a political impact, monetary policy measures and instruments that can be used by central banks have a much faster and more tangible effect. The professionalism of central bank teams, the resources and tools they use are important to ensure an adequate response to challenges and overcome the crisis, ”said Armasu. He noted that last year the National Bank took all legal measures to ensure that the monetary policy supported the economy, and the existing reserves were able to absorb shocks. “The NBM set itself the task of maintaining sufficient liquidity of the banking system and providing anti-crisis communications. Measures of the monetary policy were taken promptly, in real time. Base rates have reached a historic low, and over the entire period of the pandemic, the size of the required reserves of commercial banks has been continuously decreasing. This allowed the National Bank to maintain the level of banks' liquidity, which could be used to lend to the economy and, if necessary, the state, ”the head of the NBM said, noting that the latest decisions confirm the NBM's commitment to further support the economy, namely, consumption and economic activity. At the same time, he noted that overcoming the pandemic crisis would not have been possible without the reforms that have been carried out recently. “The reforms resulted in the arrival of large investors in the Moldovan banking market, getting rid of banks from toxic shareholders, improving corporate governance in banks, switching to Basel III, introducing a risk management system, improving financial performance. And today the banking sector is transparent, operates in accordance with international standards, has sufficient liquidity to finance the economy, - said the President of the NBM, noting that now it is necessary to protect what has been implemented in recent years, and this is the biggest challenge. “Today, the role of justice is essential for the observance of the principles of the rule of law and the rule of law. We understand that the mandate and powers may not be clear enough and the legal framework in the banking sector is complex. But such problems in the justice system as corruption, external influence, protection of personal and group interests actually nullifies the efforts of the NBM and plans for the further implementation of reforms, ”said Armasu. The roundtable presented the experience of European countries in strengthening the financial and banking sector, the preconditions created by COVID to expand the inflation targeting mandate in developing countries, the role of central banks and fiscal authorities in overcoming crises, etc. // 07.04.2021 — InfoMarket
