Moldova to harmonize its legislation on rehabilitation of banks and banking resolution with the EU legislation
According to the press service of the Parliament, this is envisaged by the draft of the relevant law, aimed at strengthening the stability of the Moldovan financial system, approved by the Committee on Economy, Budget and Finance. The draft law was elaborated by the National Bank of Moldova (NBM) with the participation of the World Bank experts and was consulted with the IMF. The document aims at strengthening the banks' capacity to act in case a banking institution experiences serious difficulties. The provisions refer to the financial assistance instrument, which aims to ensure that banks have sufficient potential to absorb losses and recapitalization. At the same time, the legislative initiative specifies the conditions of financing within the framework of the application of resolution instruments - at the expense of the Resolution Fund and the Bank Deposit Coverage Fund. Accordingly, the authors propose to supplement the legislation on bank rehabilitation and bank resolution with two separate concepts - “debts that may be subject to internal recapitalization” and “eligible debts”. In addition, the document grants a number of additional powers to the National Bank as a resolution authority. The institution will be able to prohibit banks from distributing their own funds under certain conditions. Thus, a new benchmark will be introduced - the maximum amount to be distributed. It will be calculated by the NBM. Another right is related to the suspension of payment or delivery obligations under any contract to which the bank is a party, under certain specific conditions, at a stage prior to the resolution measures. According to the authors, this will increase the efficiency of the application of resolution instruments. The draft law must be approved by Parliament. // 07.11.2024 - InfoMarket
