What is the National Bank of the Republic of Moldova?

The National Bank of Moldova was established by the Decree of the President of the Republic of Moldova on June 4, 1991, with the appointment of the Governor - Leonid Talmaci. The fundamental objective of the National Bank of Moldova is to ensure and maintain price stability.

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The NBM has the following basic responsibilities:

1. establishes and implements the monetary and exchange rate policy in the state;
2. acts as the state banker and fiscal agent;
3. licenses, supervises and regulates the activity of financial institutions;
4. establishes, licenses, operates, regulates and supervises the financial market infrastructures, under the conditions established by law, and promotes their stable and efficient functioning;
5. acts as the sole body issuing the national currency;
6. establishes the exchange rate regime of the national currency;
7. maintains and manages the state's foreign exchange reserves;
8. draws up the state's balance of payments;
9. carries out foreign exchange regulation on the territory of the Republic of Moldova;
10. acts as a resolution authority;
11. licenses, regulates and supervises the activity of providing payment services and the activity of issuing electronic money, etc.

The National Bank of Moldova plays an important role in the transition to a market economy of the Republic of Moldova. Since 1991, a number of effective measures have been developed and implemented to stabilize the monetary and credit environment. The most important step in this direction was the introduction into circulation on November 29, 1993 of the national currency - the Moldovan leu - with the subsequent promotion of an anti-inflationary monetary and credit policy. Thus, it was possible to stop the galloping inflation since the beginning of the 90s. Until the introduction of the national currency, Soviet rubles and Moldovan coupons circulated on the territory of the Republic of Moldova.

national currency - the Moldovan leu - bancamea.md

The National Bank of Moldova has the exclusive right to issue banknotes and coins as a means of payment on the territory of the Republic of Moldova and to withdraw them from circulation. The National Bank also has the exclusive right to issue banknotes and commemorative coins on the territory of the Republic of Moldova as a means of payment and for numismatic purposes. The first numismatic issue took place in 1996, with the release of a commemorative coin dedicated to the 5th anniversary of the proclamation of the independence of the Republic of Moldova.

In 1995, the Parliament of the Republic of Moldova adopted the Law on the National Bank of Moldova and the Law on Financial Institutions. According to the first law, the NBM is independent in the exercise of its powers, being accountable to the Parliament. The second law aimed to create a strong and competitive financial sector, to prevent excessive risk in this system and to protect the interests of depositors.

Since 1998, the National Bank has abandoned the practice of setting the official exchange rate of the national currency against the US dollar at the Foreign Exchange and has proceeded to determine it as a simple arithmetic average of the weighted averages of the buying and selling rates of the US dollar against the Moldovan lei on the inter- and intrabank market. This fact has allowed the decentralization of the domestic foreign exchange market in accordance with the practices of developed countries.

As a result of the liquidation of excessive risks in banks and the creation of the necessary conditions for maintaining their financial stability, in July 2004, the deposit guarantee system was established by launching the activity of the Deposit Guarantee Fund in the banking system. The legal status of this fund ensures its legal, operational, financial and administrative independence. All banks licensed by the National Bank of Moldova must participate in the deposit guarantee system. The funds intended for deposit guarantee are accumulated from the contributions of banks.

Also, in the context of alignment with international standards, in 2006, the National Bank of Moldova implemented a new automated interbank payment system (SAPI). It consists of the real-time gross settlement system intended for processing urgent and large-value payments and the net settlement clearing system intended for processing small-value payments. Thus, a modern payment infrastructure was created, which created important premises for the provision of high-quality payment services and facilitating the implementation of cashless payments.

In 2012, the Law on Payment Services and Electronic Money No. 114 of 18.05.2012, for the purpose of establishing a uniform legal framework for promoting efficient and competitive activity on the market for the provision of payment services, issuance and redemption of electronic money and for protecting the legitimate rights and interests of payment service users and electronic money holders.

The entry into force of this law, the provisions of which were transposed from the EU regulatory framework, created premises for the emergence of new players on the electronic payment services market, namely non-bank payment service providers, which boosted the development and diversification of cashless payment methods.

In order to capitalize on the opportunities and initiatives to promote new cashless payment instruments, the National Bank of Moldova established, in 2013, the National Payments Council (NPC), a professional forum for high-level consultation between various public and private institutions, to support the safe and stable functioning of the payment system in the Republic of Moldova. The NPC will facilitate the alignment of payment services with market demand and the highest international standards and will contribute to encouraging competition on the cashless payments market, so that economic agents and the population benefit from quality payment services at advantageous prices.

Also, to streamline fund transfers, in the banking sector of the Republic of Moldova, during the period 2013-2017, the IBAN (International Bank Account Number) code was implemented for both international and national transfers, in order to minimize errors, data processing time and reduce the costs of transfer services.

Since 2013, the National Bank has switched to the direct inflation targeting regime.

In accordance with the Medium-Term Monetary Policy Strategy (approved by Decision of the Board of Directors of the National Bank of Moldova No. 303 of December 27, 2012), the NBM has established the inflation target calculated based on the consumer price index at 5.0% annually with a possible deviation of ±1.5 percentage points. At the same time, in line with the inflation target, the National Bank of Moldova opted for a managed exchange rate float regime, without having a pre-established target.

In order to strengthen the capacities of the National Bank of Moldova to intervene in crisis situations, through Law no. 232 of 3.10.2016 on the recovery and resolution of banks, the Republic of Moldova transposed Directive 2014/59/EU on the recovery and resolution of credit institutions and investment firms, which is also a commitment assumed by our country in the context of the Association Agreement with the European Union. Thus, with the implementation of this law, the National Bank of Moldova, as a resolution authority, has legal levers to prevent insolvency or, if it occurs, to minimize the negative consequences by maintaining the systemically important functions of the institution in this situation.

Pursuant to Law no. 202/2017 on the activity of banks, as well as in the context of alignment with Basel III standards, in August 2018, the NBM implemented the first set of macroprudential instruments – capital buffers. They aim to increase the resilience of banks against potential losses resulting from the materialization of certain systemic risks. The NBM periodically reviews the established capital buffer rates and, if necessary, adjusts them.

The National Bank of Moldova has carried out its activity under the leadership of Governors Leonid Talmaci, Dorin Draguțanu, Sergiu Cioclea, Octavian Armașu. Since December 22, 2023, the Governor of the National Bank is Anca Dragu.