## Central Bank Transparency Review — Executive Summary and Detailed Findings (National Bank of Moldova) ## Source details **Canonical URL:** [Central Bank Transparency Review — Executive Summary and Detailed Findings (National Bank of Moldova)](https://www.imf.org/-/media/files/publications/cr/2025/english/1mdaea2025001-print-pdf.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2025/english/1mdaea2025001-print-pdf.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2025/english/1mdaea2025001-print-pdf.pdf.json) --- ### Review scope, mission, and methodology - Mission conducted the Central Bank Transparency Code (CBT) review at the request of the NBM; the review covers all CBT principles except those not performed by the NBM or outside CBT scope (consumer protection; microprudential supervision and resolution; Financial Markets Infrastructure). - The mission took place during November 7–18, 2024; initiatives implemented after the review date have not been considered. - The review approach consisted of a preliminary desk review (including the NBM Self-Review questionnaire) and in-depth discussions; more than 40 meetings were conducted over two weeks with NBM management and staff and with key stakeholders. - The review mapped NBM transparency practices against CBT best practices principle-by-principle, considering timeliness, periodicity, and quality of disclosure, and incorporated stakeholder views. ### High-level findings - Overall assessment - The NBM implements advanced transparency practices in key areas, aligns with core and expanded practices of the CBT, and in several areas meets comprehensive practice requirements. - External stakeholders view the NBM as a public institution that has recently become more dynamic and transparent, though there remains room for improvement. - The NBM’s history regarding trust and accountability significantly influences current transparency and communication practices. - Governance and legal framework - Extensive disclosure on legal structure, mandate, and governance; almost all updated relevant legislation is available on the NBM website. - Transparency of oversight arrangements, financial reporting practices, external audit mechanism, and internal audit arrangements are comprehensive. - Governance and human capital disclosures are at the "expanded" level, with opportunities to disclose additional procedural details (e.g., Rules of Procedure of the Executive Board and the Supervisory Board). - Official relations - Transparency of official relations with international organizations and foreign agencies is clear and adequate. - Disclosure of practical interactions with the Government and domestic public financial agencies has room for improvement. - AML/CFT and internal controls - AML/CFT supervisory responsibility is undertaken transparently in many respects; internal AML/CFT Regulation is not publicly available. - Internal code of conduct and anti-corruption measures are clear and accessible. - Annual reports provide general information on AML/CFT supervisory outcomes but do not publish names of sanctioned financial institutions. - Monetary policy and analysis - Monetary policy framework is well disclosed and meets operational transparency norms. - The NBM holds ordinary monetary policy meetings eight times a year; four meetings are associated with the Inflation Report and four are devoted to assessment of deviation risks to the inflation forecast. - Summaries of Executive Board minutes regarding monetary policy decisions are published in the Inflation Report with a frequency of six months from the adoption of the decision. - Current inflation target: 5.0 percent annually, with a possible deviation of ± 1.5 percentage points. - FX policy, FX administration, and reserves - Broad objectives, legal/institutional frameworks, and instruments for FX intervention and FX administration are disclosed. - The NBM does not disclose the decision-making structure, process, or authority for FX intervention decisions. - Foreign exchange reserves management discloses key objectives, risk exposure, governance, and investment structure; publishing an Investment Policy document is recommended. - Macroprudential policy, stress testing, and financial stability - Macroprudential framework (objectives, strategy, instruments) is disclosed; FSR published annually. - Stress testing is performed and results are published at an aggregated level; enhanced disclosure of stress testing modalities, scenarios, assumptions, and data is recommended. - NCFS activities are insufficiently disclosed; improved agenda, outcomes, and communication strategy are recommended. - Emergency Liquidity Assistance (ELA) - Publication of Regulation No. 343/2019 (ELA Regulation) significantly enhanced ex-ante ELA transparency; ELA technical note included in 2022 FSR. - No recent ELA operations reviewed; NBM applies strict confidentiality to ongoing ELA operations. - Recommended: establish an ELA communication strategy for ex-post communication, incorporate into simulation exercises, and consider limited ex-post disclosure of repaid ELA loans when appropriate. - Communications and confidentiality - Current communications strategy is fragmented; a new communications strategy is expected in 2025 and should define clear objectives and measurable targets. - Website usability and accessibility should be improved (simplified language, visuals, dashboards). - Confidentiality arrangements could be improved by publishing reasons for rejecting information requests and disclosing stakeholder input on confidentiality policy. ### Key statistics and quantitative findings - Mission meetings: more than 40 meetings during November 7–18, 2024. - Monetary policy: ordinary Executive Board meetings held eight times a year; four linked to the Inflation Report, four for deviation risks assessment. - Publication timing: summaries of minutes published with a frequency of six months from adoption of the decision. - Communication dataset assembled by the mission: - NBM communication dataset: 892 documents, including 177 reports and 715 press releases. - Comparison corpora: Romania — 2,247 texts; Georgia — 5,757 texts. - Readability metrics: - Moldova’s inflation target: 5.0 percent annually, deviation ± 1.5 percentage points. - Word counts: Moldova’s inflation reports increased from approximately 220,000 to 320,000 words between 2019 and 2024. ### Detailed, enumerated recommendations (numbered list from the report) 1. Streamline the communication framework and make it more accessible to the public, by developing a proactive institutional approach to communications; publishing a summary of key documents; simplifying the language to be understood by the general public; and improving the website’s accessibility. 2. Take further steps to improve monetary policy transparency by providing more information on monetary policy meeting deliberations in a timely manner, and publishing the underlying analysis, including macroeconomic forecast modelling. 3. Disclose information on the assessment of financial stability more regularly and publish meaningful information on stress testing, including the modalities, scenarios and assumptions, and underlying data, compatible with data protection rules. This should also include the explanation of how ELA contributes to financial stability. 4. Strengthen the disclosure of the Financial Stability Report, by discussing it in a financial stability forum, inviting the relevant stakeholders and, preferably, presenting it to the Parliament. 5. Enhance the disclosure of the activities of National Committee for Financial Stability (NCFS), including the publication of the agenda, main tasks, and outcomes for each meeting, while keeping sensitive information confidential. 6. Enhance transparency in AML/CFT supervision, by publishing an overview of its risk-based supervisory policies, provide staffing statistics and names of sanctioned financial institutions, describe its internal AML/CFT regulation and risk mitigation measures, and include a summary of these activities in its annual reports. 7. Improve the transparency of FX management and cross-border capital flow regulations, by publishing and explaining the capital account liberalization plan, and disclosing the decision-making process for setting the foreign exchange (FX) policy and for FX interventions. 8. Enhance the disclosure of the central bank’s governance, by publishing the Rules of Procedure of the Executive Board and the Supervisory Board. 9. Improve its confidentiality arrangements, by publishing reasons for rejecting information requests, disclosing stakeholder input on its confidentiality policy, and providing information on legal disputes related to confidentiality and secrecy. 10. Enhance the transparency of its relations with the Government, by disclosing how this cooperation takes place in practice and by disclosing agreements with the Government and its agencies that determine the further conditions and instruments for the relationship, except for publishing sensitive information. 11. Improve the transparency of its relations with other domestic agencies by publishing the bilateral and multiagency agreements that have the purpose of exchanging information and cooperation if the counterpart agrees in its publication and disclosure. ### Selected, specific enhancement opportunities and operational recommendations - Governance and legal disclosures - Publish Rules of Procedure of the Executive Board and the Supervisory Board (recommendation implemented in part: extracts published on the website). - Disclose internal regulations and decision-making procedures for budget determination and expenditure. - Explain on the website what NBM autonomy consists of, how it is implemented in practice, and the rationale for this autonomy. - Monetary policy transparency - Publish decisions promptly (recommendation: publish decision within weeks after each meeting). - Publish more information on Executive Board deliberations focusing on risks around the central projection. - Disclose the forecasting model and scenario analyses used for inflation projections. - FX policy and reserves - Disclose decision-making structure/process/authority for FX interventions. - Publish an Investment Policy document for reserves, including strategic objectives, risk tolerance, and asset allocation guidelines. - Publish a high-level capital account liberalization roadmap to build expectations and explain sequencing. - Macroprudential policy and stress testing - Publish meaningful information on stress testing: modalities (bottom-up/top-down), scenarios, assumptions, models, coverage, and data (compatible with data protection). - Present the FSR in a financial stability forum; consider parliamentary presentation. - Enhance NCFS disclosures: agendas, tasks, main outcomes (with confidentiality safeguards). - ELA and crisis communication - Develop an ELA communication strategy covering ex-post communication, confidentiality principles, and assessment of transparency impacts on financial stability. - Incorporate ELA communication strategy into regular simulation exercises and consider including simulation results in FSR or Annual Report. - Avoid disclosure of ongoing ELA operations; consider limited ex-post disclosure of repaid ELA loans when financial stability risk has passed, in consultation with external auditors. - AML/CFT and internal controls - Publish a general description of the internal AML/CFT Regulation (main risk mitigating measures and NBM activities that give rise to ML/TF risks). - Publish staffing statistics and summaries of AML/CFT supervisory activities and enforcement outcomes, subject to confidentiality and financial stability considerations. - Consider publishing names of institutions sanctioned for AML/CFT breaches where disclosures do not threaten ongoing investigations or financial stability. - Communications and readability - Finalize and publish a communications strategy with clear objectives and measurable targets (expected in 2025). - Improve website usability: easier navigation, simplified language, visuals, dashboards, and value-driven content. - Continue financial education initiatives and use surveys to assess public literacy and communication effectiveness. ### Quantitative communication diagnostics and implications - Corpus and methodology - Mission assembled 25+ years of NBM texts (892 documents: 177 reports and 715 press releases); used lexical, syntactic, and LLM-based semantic analyses. - Key diagnostics - Moldova’s inflation reports increased from approximately 220,000 to 320,000 words between 2019 and 2024. - Moldova’s monetary policy decision documents have become more analytical since 2022 and show improved readability trends since 2021. - Readability: Moldova’s annual reports and FSR have higher Flesch-Kincaid Grade scores than Romania and Georgia; monetary policy decisions have the lowest wording complexity among peers. - Semantics and stance: - Monetary policy topics account for more than 80 percent of NBM communication. - NBM’s communication is highly focused (less topic diversity) compared with peers. - NBM is the most hawkish on average, with increasing hawkishness and risk-highlighting over time. - Forward-lookingness: - Forward-looking content increased after adoption of inflation targeting in 2010 but remains lower than peers in some publications. - Recommendations based on diagnostics - Streamline long reports and adopt clearer, concise language and visuals to improve public comprehension. - Broaden topic coverage via targeted publications and press releases to reach non-specialist audiences. - Use automated, LLM-based monitoring to benchmark and improve communication practices over time. *Source: IMF staff construction, Executive Summary and Annex I of the Central Bank Transparency Review for the National Bank of Moldova (mission: November 7–18, 2024).* ### EXECUTIVE SUMMARY __________________________________________________________________________ 5 ### EXECUTIVE SUMMARY ### Overview and context - The National Bank of Moldova (NBM) has emerged from a challenging history regarding trust and accountability, which significantly influences its current transparency and communication practices. - The NBM’s transparency practices align with core and expanded practices as defined by the IMF Central Bank Transparency Code (CBT) and, in several areas, meet comprehensive practice requirements. - External stakeholders view the NBM as a public institution that has recently become more dynamic and transparent, though there is room for improvement. ### Main findings (high level) - Governance and legal framework - The NBM implements advanced transparency practices in key areas, providing extensive information on its legal structure, mandate, and governance. - Most updated relevant legislation is available on its website. - Transparency of the NBM’s oversight arrangements, financial reporting practices, external audit mechanism, and internal audit arrangements are comprehensive. - Transparency practices on governance and management of human capital are expanded. - Official relations - Transparency of the NBM’s official relations is adequate but has room for improvement. - The NBM clearly defines and discloses relationships for information exchange and policy coordination with international organizations, foreign governments, other central banks, and relevant foreign agencies. - Disclosure of practical interactions with the Government and its agencies is less transparent; there is room for improvement in disclosure practices with domestic public financial agencies. - AML/CFT and internal controls - The NBM undertakes its AML/CFT supervisory responsibility transparently, but gaps persist in internal AML/CFT activity transparency. - The internal code of conduct and anti-corruption measures are clear and accessible. - The NBM provides expanded information on AML/CFT supervisory operations, and annual reports provide general information on outcomes but not the names of sanctioned financial institutions. - The NBM publishes extensive information on its internal controls’ framework; it should consider adding a general description of the internal AML/CFT Regulation, including main risk mitigating measures and current activities that give rise to ML/TF risks, and publish information on conducted internal AML/CFT control activities and their results. - Monetary policy and supporting analysis - Based on its clear mandate, the NBM’s monetary policy framework is well disclosed. - The NBM has significantly increased transparency of the monetary policy framework, although disclosure of its decisions and model-based forecasts could be enhanced. - The NBM should improve monetary policy transparency by providing more information on monetary policy meeting deliberations in a timely manner and publishing the underlying analysis, including macroeconomic forecast modeling. - Foreign exchange (FX) policy, FX administration, and reserves - The NBM discloses broad objectives of its foreign exchange intervention policy, interaction with monetary policy, relevant legal and institutional frameworks, and main instruments used. - The NBM does not reveal its decision-making structure, process, or authority regarding FX intervention decisions. - Policy objectives, legal, and institutional frameworks for FX administration and regulation of cross-border financial flows are clearly defined and disclosed; implementation tools are clearly defined and disclosed. - Publishing the overall capital liberalization plan, even without all details, would build expectations and foster understanding of implementation sequencing and supporting reforms. - The NBM discloses key objectives, risk exposure, governance with oversight responsibility, and investment structure of its FX reserve management, and broad criteria for selecting reserve assets and instruments; publishing an Investment Policy document would enhance transparency. - Macroprudential policy, stress testing, and financial stability arrangements - The NBM discloses its macroprudential policy framework, including objectives, strategy, and instruments, and periodically discloses assessment of financial risks. - Enhanced transparency on stress testing and ex post evaluation is desirable: publish meaningful information on stress testing modalities, scenarios, assumptions, and underlying data compatible with data protection rules, and explain how ELA contributes to financial stability. - The NBM should disclose information on assessment of financial stability more regularly and strengthen disclosure of the Financial Stability Report via discussion in a financial stability forum, inviting relevant stakeholders, and preferably presenting it to Parliament. - Activities of the National Committee for Financial Stability (NCFS) could be enhanced. - Emergency Liquidity Assistance (ELA) - Transparency of the ELA framework has been greatly enhanced with publication of the NBM’s ELA Regulation in 2019. - The NBM should establish a communication strategy for ELA operations covering ex-post communication and assessing transparency's impact on financial stability; maintain strict confidentiality for ongoing ELA operations while being prepared to communicate if required; incorporate the communication strategy into regular ELA simulation exercises. - Communications and confidentiality - The NBM’s communications strategy is fragmented and should have clear objectives and measurable targets. - The NBM has identified target audiences and utilizes a wide range of tools but should make its website more user-friendly, document communication processes, and integrate communications into supervision, financial stability, and opinion issuance. - Improve confidentiality arrangements by publishing reasons for rejecting information requests, disclosing stakeholder input on its confidentiality policy, and providing information on legal disputes related to confidentiality and secrecy. ### Key statistics and assessments (as presented) - The review maps the NBM’s transparency choices against the CBT across five pillars: (i) governance; (ii) policies; (iii) operations; (iv) outcomes; and (v) official relations. - Principles not performed by the NBM (denoted “Not Applicable” in the review) include consumer protection, and principles that fall outside CBT reviews given established international standards: microprudential supervision and resolution, and Financial Markets Infrastructure. ### Key recommendations (numbered list from the report) 1. Streamline the communication framework and make it more accessible to the public, by developing a proactive institutional approach to communications; publishing a summary of key documents; simplifying the language to be understood by the general public; and improving the website’s accessibility. 2. Take further steps to improve monetary policy transparency by providing more information on monetary policy meeting deliberations in a timely manner, and publishing the underlying analysis, including macroeconomic forecast modelling. 3. Disclose information on the assessment of financial stability more regularly and publish meaningful information on stress testing, including the modalities, scenarios and assumptions, and underlying data, compatible with data protection rules. This should also include the explanation of how ELA contributes to financial stability. 4. Strengthen the disclosure of the Financial Stability Report, by discussing it in a financial stability forum, inviting the relevant stakeholders and, preferably, presenting it to the Parliament. 5. Enhance the disclosure of the activities of National Committee for Financial Stability (NCFS), including the publication of the agenda, main tasks, and outcomes for each meeting, while keeping sensitive information confidential. 6. Enhance transparency in AML/CFT supervision, by publishing an overview of its risk-based supervisory policies, provide staffing statistics and names of sanctioned financial institutions, describe its internal AML/CFT regulation and risk mitigation measures, and include a summary of these activities in its annual reports. 7. Improve the transparency of FX management and cross-border capital flow regulations, by publishing and explaining the capital account liberalization plan, and disclosing the decision-making process for setting the foreign exchange (FX) policy and for FX interventions. 8. Enhance the disclosure of the central bank’s governance, by publishing the Rules of Procedure of the Executive Board and the Supervisory Board. 9. Improve its confidentiality arrangements, by publishing reasons for rejecting information requests, disclosing stakeholder input on its confidentiality policy, and providing information on legal disputes related to confidentiality and secrecy. 10. Enhance the transparency of its relations with the Government, by disclosing how this cooperation takes place in practice and by disclosing agreements with the Government and its agencies that determine the further conditions and instruments for the relationship, except for publishing sensitive information. 11. Improve the transparency of its relations with other domestic agencies by publishing the bilateral and multiagency agreements that have the purpose of exchanging information and cooperation if the counterpart agrees in its publication and disclosure. ### Scope, objective, and methodology (concise) - The mission conducted the Central Bank Transparency Code review at the request of the NBM. - The review covers all CBT principles except those not performed by the NBM or outside CBT scope (consumer protection; microprudential supervision and resolution; Financial Markets Infrastructure). - The review aims to map NBM transparency practices against CBT best practices to identify strengths and areas for improvement and to help strengthen dialogue with stakeholders while balancing independence and accountability. - The CBT review is not an assessment of central bank policies and is not intended as a transparency ranking tool. *Source: IMF staff construction, Executive Summary of the Central Bank Transparency Review for the National Bank of Moldova.* ### 14. The mission’s review approach consisted of a desk review and in-depth discussions ### 14. The mission’s review approach consisted of a desk review and in-depth discussions ### Review approach and scope - The mission conducted a preliminary desk review based on publicly available information and the Self -Review questionnaire provided by the NBM prior to the mission. - The mission took place during November 7–18, 2024; initiatives implemented after the review date have not been considered. - More than 40 meetings were conducted over the course of two weeks with NBM management and staff and with key stakeholders (public and private sector, including academia, think tanks and journalists). - Meetings with key stakeholders were planned in coordination with the central bank; NBM staff did not attend those stakeholder meetings. - The mission appreciated the provision of self-review, documentation, technical support, and facilitation of the mission meetings schedule by NBM staff. - Annex III lists NBM’s units and external stakeholders consulted. ### Review methodology - The review was conducted principle-by-principle and mapped NBM’s transparency practices against a range of best practices, within the context of the NBM’s legal mandate, policy context, and prevailing general legal framework. - Important dimensions of transparency considered included: (i) timeliness; (ii) periodicity; and (iii) quality of disclosure (the latter assessed in terms of accessibility and ease of understanding, especially by the general public). - The review incorporated views expressed by NBM stakeholders. ### Background: mandate, governance, and role - The legal framework governing the NBM consists of the Law on the National Bank of Moldova, amended several times recently to strengthen mandate, autonomy, and decision-making structure. - The Law clearly stipulates the price stability objective for the NBM, supplemented by the financial stability objective. - Key decision-making structures: the Supervisory Board, the Governor, and the Executive Council. - IMF involvement: 2020 Governance Diagnostic, 2021 Safeguard Assessment, and the latest governance diagnostic mission. - Concerns about NBM independence persist; improved governance mechanisms regarding appointment and dismissal agreed with the IMF have been incorporated in the latest draft amendments to NBM Law. - NBM responsibilities include: prudential regulation and supervision of the banking sector, payment systems supervision, establishment of macroprudential policy instruments, identification of systemically important banks, acting as resolution authority for banks, and publishing the Annual Financial Stability Report (FSR). - Since July last year, the NBM became responsible for regulating and supervising the insurance sector, non-bank credit organizations, savings banks, and credit registries. - The NBM Governor chairs the National Committee on Financial Stability (NCFS), which implements macroprudential policy and manages systemic crises; NCFS can issue recommendations while NBM has autonomy in introduction and calibration of macro-prudential instruments. - Post-mid-2010s response: strengthened supervisory architecture, enhanced financial safety net, and improved AML/CFT regime. ### Communications and reputation - NBM is committed to open and transparent communications based on its communication strategy; key channels: website, press-releases, Inflation Report, Financial Stability Report, and active social media use. - Reputation challenges: repeated criticism for insufficient asset recovery related to the banking fraud and tarnished reputation due to criminal proceedings against NBM management and staff allegedly involved in the banking fraud. ### Main findings — Pillar I: Transparency in Governance Legal structure, mandate, and decision-making - The NBM provides extensive information on its legal structure, mandate, and governance; almost all updated relevant legislation is available on its website. - The NBM Law and website provide a clear overview of objectives, functions, and powers; the Law contains provisions relating to supervision of banks and clarifies which law prevails in event of conflict. - The NBM falls (with exceptions) under the Law on transparency in the decision-making process, which obliges the NBM to provide information and to consult citizens and stakeholders when making decisions that adjust the NBM's legal framework. - Suggested enhancements: - Publish Rules of Procedure of the Executive Board and the Supervisory Board on the NBM website. - Disclose further information regarding the autonomy of members of the Supervisory Board and the Executive Board, including internal regulations governing remuneration and arrangements for its determination. - Disclose regulations and internal decision-making procedures for determination and expenditure of the budget. - Explain on the website what NBM autonomy consists of, how it is implemented in practice, and the rationale for this autonomy. Decision-making transparency - NBM clarifies organizational structure, responsibilities, composition, powers, and some procedural rules in law, website, and Annual Report. - Gaps identified: - Lack of detailed provisions on how decisions are prepared and specific rules applying to decision-making bodies. - Recommended disclosures: annual work plans of Executive Board and Supervisory Board; charters and work plans of Investment Committee, Risk Committee, and Business Continuity Committee. Box: Moldova—Law on Transparency in the Decision-Making Process - The Moldovan "Law on Transparency in the Decision-Making Process" (Law No. 239-XVI), enacted in 2008, mandates transparency and consultation for draft acts of autonomous agencies that may affect citizens' rights, welfare, or access to public services. - Exemptions: documents related to monetary policy, mandatory reserves, the official exchange rate, market interventions, currency safeguards, macroeconomic analyses, and urgent decisions are exempt from consultation requirements; in practice, generally applicable regulatory acts of the NBM fall under consultation obligations. - Based on the law, the NBM adopted a regulation on drafting and adopting legislative and administrative acts that may have economic or social impacts. Risk management and accountability framework - NBM discloses comprehensive risk exposure across four categories: (i) financial, including credit, liquidity, and market risks; (ii) strategic; (iii) operational; and (iv) environmental. - Risk governance: risk tolerance and risk appetite approved by the Supervisory Board; Framework on Operational Risk Management aligns with COSO, ISO 31000, and leading practices; governance includes an Audit Committee and an executive-level Risk Committee. - Suggested enhancements to Annual Report disclosure: - Description of the process of continuous identification, evaluation, and mitigation of risks. - Any developments in the NBM’s risk framework. - High-level overview of policies and arrangements to protect the NBM’s financial resources for times of crisis. Audit, financial reporting, and internal audit - Audit Committee: - Charter/Regulation on audit committee is published and expected to be revised in 2025. - Composition and biographies of AC members are disclosed on the NBM website. - AC mandate: oversee financial reporting; evaluate efficiency of internal control system and risk management; monitor internal audit and external auditors. - AC considers the Annual Report and annual financial statements prior to Board approval and publishes an Audit Committee Report as part of the Annual Report. - Suggested enhancement: provide more detailed information on Audit Committee activities in the Audit Committee Report. - Financial reporting: - Annual financial statements prepared in accordance with IFRS and audited in accordance with International Auditing Standards by an independent auditor’s firm confirmed by the Supervisory Board on a five-year rotation basis. - Complete set of independently audited financial statements published on the website; external auditor’s report states audit conducted in accordance with International Standards on Auditing. - Internal audit: - Internal audit function is defined in law (Article 33) and on the NBM website; Internal Audit Charter approved by the Supervisory Board under Regulation on Internal Audit Department. - Internal audit executed in conformity with the Institute of Internal Auditors’ (IIA) Standards for the Professional Practice of Internal Auditing (IPPF) and enshrined in the Charter. - Internal Audit Charter currently under review to align with the IIA Global Standards effective January 9, 2025. - 2023 Annual Report includes a section on Internal Audit Department activities: main objectives; alignment with IPPF; compliance with IIA Standards according to External Quality Assessment report dated March 17, 2021; actions to implement approved action plan; degree of completion of the annual internal audit plan and coverage of the audit universe. Human capital governance - Transparency of governance and management of human capital is categorized at the "expanded" level. - NBM publishes information on staff development, diversity and inclusion, recruitment, and retention on its website and in the annual report. - Opportunity: improve transparency by disclosing reporting and review arrangements on staffing matters between middle/senior management and oversight bodies. Communications and confidentiality - Communication strategy: - Current NBM communication strategy is fragmented. - Management recognized in early 2024 the need to improve communication methods and forms of disclosure. - A new NBM communications strategy is expected to be finalized in 2025 and should have clearer objectives and measurable targets where possible. - Suggested actions: conduct regular surveys to assess public literacy on NBM topics; document communication processes; integrate communication into core activities (supervision, financial stability, issuing opinions). - Outreach and website usability: - NBM has clearly identified target audiences and uses a wide range of engagement tools. - Website should be more user-friendly: easier navigation, simplified language, more visuals, dashboards, and value-driven content. - Suggested actions: prepare simplified messages and illustrations for key contents and publications; continue education initiatives with children and academics; better advertise key reports (such as FSR) via several channels; improve regulatory drafting process transparency (pipeline, timeline for comments, implementation dates). - Confidentiality: - Confidentiality practices are supported by Law on access to public information and Article 36 of the NBM Law. - NBM has a dedicated webpage for "Requests for information of public interest and petitions" detailing procedures and applicable laws. - When rejecting a request for access to public information, NBM elaborates reasons with reference to protecting specific interests. - Suggested enhancements: - Publish a statement with reasons for rejecting access when deciding not to allow certain information, especially in cases judged to be of high public interest. - Disclose whether it actively sought stakeholder input on confidentiality policy. - Publish information on possible legal disputes surrounding its confidentiality and secrecy policy. ### Main findings — Pillars II, III, and IV: Transparency in Policies, Operations, and Outcome Monetary policy transparency - NBM effectively discloses its monetary policy framework: objective, strategy, instruments, operational framework and target, and description of monetary policy transmission mechanism in the medium-term monetary policy strategy published on its website. - Current inflation target: five percent annually, with a possible deviation of ± 1.5 percentage points. - Suggested enhancements: - Provide more information on the process of setting the inflation target (external stakeholders report it is not understood). - Improve accessibility of monetary policy communications by simplifying language, using social media for key messages, and conducting Monetary Policy Forums reaching the broader public. *Source: IMF staff (excerpts from the mission review).* ### 31. The NBM has significantly increased its transparency of the monetary policy ### 31. The NBM has significantly increased its transparency of the monetary policy ### Monetary policy transparency - The NBM meets eight times a year in ordinary monetary policy meetings according to the approved schedule. - Four monetary policy meetings are associated with the Inflation Report, which is the main communication tool reflecting the latest analysis of in the internal and external economic environment, developments in the inflation process and economic. - The other four meetings are devoted to the assessment of the deviation risks to the inflation forecast; each meeting is accompanied by a detailed Monetary Policy Statement explaining the decision, and by a press conference led by the Governor. - The summaries of the minutes of the meetings of the Executive Board of the NBM regarding monetary policy decision are published in the inflation report with a frequency of six months from the adoption of the decision. - Recommendations / enhancement opportunities: - Publish the decision within weeks after each meeting. - Provide more information on the executive board deliberations focusing on the risks around the central projection. - Disclose the forecasting model, which is an important input to the monetary policy decision-making process. ### Foreign Exchange Administration and Cross-Border Financial Flows - The policy's objectives, legal, and institutional frameworks for FX administration and the regulation of cross-border financial flows are clearly defined and disclosed. - The central bank's roles, responsibilities, and powers are distinctly separated from those of the government and other agencies, embedded in relevant legal frameworks like the Law on the National Bank and the Law on Foreign Exchange Operations. - The NBM discloses the roles and responsibilities of its decision-making bodies, and policy decisions are disclosed with sufficient lead time for affected parties to adjust. - The NBM timely communicates the general considerations and expected outcomes of policy decisions, enhancing transparency with detailed disclosures. ### Implementation tools, licensing, and operational transparency - The NBM has clearly defined and disclosed its implementation tools for cross-border capital flow and foreign exchange (FX) administration policies, including: - the regulatory framework, licenses, reports, monitoring and enforcement instruments, and FX transactions; - types and hierarchy of regulatory instruments; licenses and approvals the NBM can grant; required reports; monitoring and enforcement tools (including sanctions); and FX operations with applicable fees. - The framework specifies activities, persons, and transactions regulated, licensed, approved, monitored, and sanctioned, along with rules, conditions, and documentation required. - It outlines procedures for granting or denying licenses and approvals, decision timelines, and the roles of decision-making bodies. - Decisions, including reasons for rejecting requests, are communicated promptly. - Suggested enhancements: - Provide brief descriptions of regulatory instruments. - Explain licensing and policy instruments through accessible Q&As. ### Governance, interactions, and disclosure on cross-border flows - The NBM provides information on its governing bodies, their responsibilities for policy implementation, and performance reporting. - Suggested disclosures: - How the policy interacts with other policies, such as monetary, macroprudential, and fiscal policies. - Evaluations of actions taken to achieve policy objectives and their results. - Regular disclosures about regulatory framework changes, licensed entities and individuals (including details and activities), sanctions for noncompliance, and aggregate data on cross-border financial flows and foreign exchange transactions. ### Capital account liberalization communication - Effective communication can enhance the credibility of the capital account liberalization strategy by showing comprehensiveness, consistency across policies, and adaptability. - Publishing the overall liberalization plan, even without all details, can: - build expectations of commitment to implementation; - foster understanding of how liberalization steps and supporting reforms are interconnected; - explain how supporting reforms gradually enhance capacity to manage large and potentially volatile capital flows. ### Foreign Exchange Management - The NBM discloses the broad objectives of its foreign exchange intervention policy, its interaction with monetary policy, and the relevant legal and institutional frameworks. - The NBM does not reveal its decision-making structure, process, or authority regarding foreign exchange intervention decisions. - Under the managed floating exchange rate regime, individual intervention decisions are not separately communicated; rationale and economic analysis can be inferred from quantitative information and the intervention strategy described in the Annual Report and the Monetary Policy Strategy. - The NBM discloses the main instruments it uses to achieve its foreign exchange (FX) intervention objectives and the FX management framework, including markets (e.g., spot and derivatives) and criteria for choosing transaction institutions. - Suggested enhancements: - Explain the rationale for selecting FX instruments. - Present the modus operandi of FX operations in a standalone, regularly updated section on the website. - Disclose governance structure and responsibilities of governing bodies regarding FX management (e.g., terms of reference of the Executive Board, Annual Report, or standalone section). - Publish policy decisions, outcomes, and changes to operational mechanisms in the annual report. - The NBM reports on its interventions on its website, including the aggregate volume of interventions and whether specific instruments were bought or sold, on a monthly basis. ### Foreign Exchange Reserves Management - The NBM discloses key objectives, risk exposure, governance with oversight responsibility, and investment structure of foreign exchange reserve management. - It reveals decision-making process, key assumptions, methods for making investment and risk decisions, and the allocation of oversight responsibility. - The NBM provides the rationale and economic analysis supporting strategic investment and risk decisions. - The NBM discloses broad criteria for selecting reserve assets, instruments, and limited risk disclosures, and broad criteria for selecting eligible counterparties and issuers. - Suggested enhancement: - Publish an Investment Policy document outlining strategic objectives, risk tolerance, and guidelines for asset allocation. - The NBM publishes information about foreign exchange reserve assets, liabilities, short-term drains, and commitments by the monetary authorities according to a predefined schedule. - The Annual Financial Statements are prepared in accordance with a robust and widely recognized accounting framework, accompanied by an external audit opinion. - The NBM discloses institutional obligations, objectives, and responsibilities of its decision-making bodies for reserve management and may consider disclosing evaluations of policy actions taken. ### Macroprudential Policies - The NBM discloses its macroprudential policy framework, including objectives, strategy, instruments, and the method to implement its strategy. - The NBM plays a major role in maintaining financial stability through prudential regulation and supervision of banking and insurance sectors, oversight of payment systems, establishment of macroprudential instruments, and identification of systemically important institutions. - Recent legal change: the NBM law has been amended to provide clarity on the NBM mandate in defining and implementing macroprudential policy in relation to the entities supervised by the NBM. - The NBM may apply macroprudential measures by normative act or individual administrative act and discloses macroprudential instruments and tools designed to limit various aspects of financial sector risk. - National Committee for Financial Stability (NCFS): - Activities could be enhanced; public information on NCFS activities is limited. - The NBM, acting as secretary, is encouraged, in coordination with NCFS members, to publish the agenda and disclose information on tasks, decision making process (including minutes), and outcomes of NCFS meetings, while keeping sensitive information confidential. - The NCFS should develop a communication strategy with the public in normal times to foster public confidence during crisis. - Accountability for financial stability could be improved: the press release on NCFS meetings is published as an internal document by the NBM, not by the NCFS. - Stress testing and ex post evaluation: - The NBM publishes once a year information on its assessments of financial vulnerabilities, including stress testing, and is transparent on methods to address systemic risk. - Recommended additional disclosures: - Publish information on the solvency stress test and underlying assumptions and scenarios for credit risk, liquidity risk, and contagion risk. - Accompany the Financial Stability Report (FSR), published once a year, with a press conference to reach external stakeholders and discuss financial stability and macroprudential policy issues. - Carry out analytical works enhancing ex-post evaluations of whether implemented macroprudential measures achieved intended effects. ### Emergency Liquidity Assistance (ELA) - Transparency improvements: - Publication of the NBM’s ELA Regulation in 2019 significantly enhanced transparency of the ELA framework. - The Legal basis for ELA is laid out in the NBM Law, article 181, and further detailed in Regulation No 343/2019 on Emergency Liquidity Assistance (‘ELA Regulation’). - A technical note on the ELA framework was included in the 2022 Financial stability report (FSR) to increase specialized public awareness. - The ELA Regulation includes comprehensive transparency practices for ELA based on international practices: institutional eligibility, conditionality, supervisory intrusion, and financial parameters. - These publications ensure a high level of ex-ante transparency of the NBM ELA framework. - Market-wide liquidity support and ELA distinction: - The NBM does not have specific provisions for market-wide liquidity support, but such support could be provided under the general power to grant collateralized loans to banks. - Article 18 of the Law on the NBM establishes that the NBM may grant collateralized loans to banks under the terms established periodically by the NBM. - Detailed loan granting provisions are outlined in Chapter III, Section 4 of the Regulation No 188/2014 on open market operations of the NBM (‘Open Market Operations Regulation’). - The NBM Law has separate provisions for market-wide liquidity support (Article 18) and bilateral support, i.e., ELA (art 181). Specific details for the two types are laid out in separate Regulations (Open Market Operations Regulation and ELA Regulation), improving understanding that ELA is independent from monetary policy and market-wide liquidity support. - Transparency of actual ELA operations: - The mission has not reviewed actual ELA operations’ transparency and communication arrangements in the absence of any recent ELA operation by the NBM, but shared general recommendations. - Recommended ELA communication strategy and principles: - Establish a communication strategy for ELA operations covering ex-post communication and assessing transparency's impact on financial stability. - Develop internal communication guidelines to regulate external communications regarding future ELA. - Disclosure of ongoing ELA operations is generally discouraged to avoid worsening banks’ liquidity stress. - Limited information on repaid ELA loans could be shared to uphold transparency and accountability, provided financial stability risk has passed. - Use the NBM’s Annual Report to explain how ELA contributed to financial stability. - In consultation with external auditors, evaluate whether further disclosure (e.g., naming banks or specifying amounts) is necessary for accounting compliance or could erode public confidence. - Avoid excessive transparency that could restrict the NBM’s flexibility in adjusting collateral requirements and risk controls for individual cases. - Consider publishing results of repaid ELA loans on the website to increase transparency of past operations. - Confidentiality and crisis communication: - Maintain strict confidentiality for ongoing ELA operations but be prepared to communicate if required. - Do not disclose a bank’s access to ELA if liquidity stress is not publicly known, given stigma and risk of exacerbation. - During a systemic crisis or widespread negative rumors, timely communication may be necessary to restore confidence; such communication should be coordinated with ELA recipients and include assurances about stabilization of liquidity and operations. - Be ready to respond to queries about ongoing ELA operations; ELA amounts may be deduced from the NBM’s published balance sheet, so a clear communication plan is essential. - Prepare an ELA factsheet for potential media or stakeholder inquiries to clarify the nature of support when needed. - Incorporate the communication strategy into regular ELA simulation exercises; in the latest exercise, the NBM’s communication team developed a strategy aligned with financial stability objectives. - Consider including results of ELA simulations in the FSR or Annual Report. ### Financial Integrity (AML/CFT and internal controls) - Governance and anti-corruption: - The internal code of conduct and anti-corruption measures applicable to the NBM governance are clear and easily accessible. - Moldova's anti-corruption legislation applicable to the NBM includes the Integrity Law, Criminal Code, Laws on the asset declarations and protection of whistleblowers. - The NBM publishes the Code of Ethics and Professional Conduct covering conflict of interests, incompatibilities, acceptance of gifts, procurement. - AML/CFT supervisory transparency: - The NBM provides expanded information on its AML/CFT supervisory operations, particularly in its annual reports. - Annual reports include statistical information on the number of completed on-site and off-site inspections, types of financial institutions inspected, and specific areas of focus. - The NBM illustrates its risk-based approach and provides information on efforts to address emerging and highest materiality ML risks (e.g., cross-border threats). - Suggested enhancements: - Publish an overview or summary of the main principles of NBM's approach to risk-based supervisory policies (e.g., based on risk-based supervision methodologies and manuals). - Expand transparency of AML/CFT supervisory outcomes by publishing the names of financial institutions sanctioned for AML/CFT breaches, the enforcement actions taken, and brief descriptions of breaches as appropriate, subject to case-by-case considerations of threats to financial stability or ongoing investigations. - Internal AML/CFT Regulation: - The NBM reported it developed an internal AML/CFT Regulation establishing an AML/CFT control framework related to its activities or services that give rise to ML/TF risks. - The Regulation outlines ML/TF mitigation measures (risk assessments, enhanced due diligence, ongoing monitoring of transactions, correspondent banking measures) but is not available to the public. - Suggested disclosures: - Add a general description of the internal AML/CFT Regulation, including main risk mitigating measures and description of NBM activities that give rise to ML/TF risks. - Consider publishing information (for example in annual reports) on conducted internal AML/CFT control activities (e.g., assurance engagements) and their results. *Source: 1mdaea2025001-print-pdf - 31. The NBM has significantly increased its transparency of the monetary policy* ### 57. While the NBM's relations with the Government and its agencies in various activities ### 57. While the NBM's relations with the Government and its agencies in various activities ### Transparency of relations with the Government - The institutional relationship of the NBM with the Government is well stipulated in several articles of the NBM Law. - The NBM website and the Annual Report "pay considerable attention to the results of cooperation between the NBM and the Government in a multitude of areas." - It is "less transparent how the NBM interacts with the Government and its agencies in practice." - Policies, terms and conditions governing the relationship and detailed instruments used in the interactions with the Government are "only partly disclosed by the NBM." - Disclosure of the agreements is provided with regard to the placement of State Securities on the market, but not with regard to other forms of cooperation with the Government. - Recommendation: "Transparency about the relationship with the Government and its agencies is increased if the NBM makes public, for instance on its website, how this cooperation takes place in practice and discloses all the agreements with the Government and its agencies that determine the further conditions and instruments for the relationship, with the exception of publishing sensitive information." ### Relations with Domestic Financial Agencies - There "is room for improvement in the NBM’s disclosure practices of its official relations with the domestic public financial agencies." - Important information regarding the NBM’s interaction with the public financial agencies (DGFBS, Ministry of Finance and PSA) could be disclosed to the public in a more detailed manner. - Suggested disclosures include publication of agreements and MoUs—"when the counterpart is agreeable to it"—and clarification for public understanding of the role and actions of the NBM and "possible shared responsibilities in functions done in conjunction with other public financial agencies." ### Relations with Foreign Agencies - The NBM "clearly defines and discloses the relationship for exchange of information and coordination of actions/policies between the central bank and international organizations, foreign governments, other central banks, and other relevant foreign agencies." - It "discloses its policies, terms, and conditions governing interaction with these bodies" and "discloses instruments used in the interaction (including financial transactions) between the central bank and these bodies." - The NBM "discloses on a regular basis the outcome of its relationship with these bodies." - The legal framework contains "detailed terms and conditions of cooperation between the central bank and foreign agencies." - The NBM "discloses agreements with foreign agencies" and "may consider publishing the content of the MOU with foreign agencies, given consent provided by the foreign agencies." - Additional option: "the NBM may publish on its website the reference to publications on other websites specifically related to the NBM." ### Other relations and investments - The NBM "discloses its involvement with private or semi-public institutions." - Investments in the CSD "constitutes 0.02 percent of the NBM’s total assets" and "is transparently disclosed in accordance with IFRS accounting standards." - The Annual Report is "transparent in describing the CSD main activities and achievements." ### Authorities’ response to detailed review — summary of assessments - The Executive Board of the NBM "expresses its deep appreciation to the International Monetary Fund (IMF) for the opportunity to conduct the Transparency Review of the NBM." - The IMF Mission (mission dates provided in the original text) found that "the NBM implements advanced transparency practices in key areas" and that the NBM "has emerged from a challenging history regarding trust and accountability, significantly influencing its current transparency and communication practices." - The review determined the NBM's transparency practices "align with the core and expended practices, and in several areas, meet comprehensive practical requirements." - External stakeholders view the NBM "as a public institution that has recently become more dynamic and transparent, though there remains room for improvement." - Positive disclosures noted: - "provides detailed information on its legal structure, mandate and governance" - "internal code of conduct and anti-corruption measures applicable to the NBM governance are clear and easily accessible" - comprehensively disclosed "risk exposure, transparency of the NBM’s oversight arrangements, financial reporting practices and external audit mechanism, transparency on internal audit arrangements" - "the NBM’s monetary policy framework is well disclosed" and "the NBM has significantly increased its transparency of the monetary policy framework" - "the policy's objectives, legal, and institutional frameworks for FX administration and the regulation of cross-border financial flows are clearly defined and disclosed" - "the NBM’s transparency of its Emergency Liquidity Assistance (ELA) framework has been greatly enhanced with the publication of the NBM’s ELA Regulation" - Identified areas for improvement: - "enhance the transparency of the reserve management activities by disclosing basic principles and practices related to its Investment Policy" - "disclosing practices of its official relations with domestic public financial agencies" - in AML/CFT area, "should consider adding a general description of the internal AML/CFT Regulation, including main risk mitigating measures and current activities that give rise to ML/TF risks" - communications strategy should "define clear communication objectives aligned with the NBM’s strategic goals, with specific and where possible, measurable targets within a pre-determined horizon." - The IMF Mission provided "11 Key Recommendations for improvement." The NBM will "develop an Action Plan with implementation timelines to ensure increased bank transparency in areas requiring improvement." ### Key recommendations and NBM responses (selected highlights) - Recommendation 1: Streamline the communication framework; NBM will "revise its external communication strategy," "publish summaries of key documents," and "simplify the language." - Recommendation 2: Improve monetary policy transparency by providing more information on meeting deliberations and publishing underlying analysis; NBM "will consider the opportunity of publishing the minutes" and "will carefully consider the necessity of publishing the forecasting model and alternative scenarios" given sensitivity. - Recommendation 3: Disclose financial stability assessment more regularly and publish meaningful information on stress testing; NBM "will consider a higher frequency of disclosures" while balancing confidentiality and systemic risks. - Recommendation 4: Strengthen disclosure of the Financial Stability Report by discussing it in a forum and "preferably, presenting it to the Parliament"; NBM "will consider" these steps. - Recommendation 5: Enhance disclosure of NCFS activities, including agenda, main tasks, and outcomes; NBM notes legal constraints under law no.209/2018 on NCFS and will "explore the experiences of other central banks" and "revise the content of the press releases issued after NCFS meetings." - Recommendation 6: Enhance transparency in AML/CFT supervision; NBM "will enhance its transparency policy regarding AML/CFT supervisory activities" and include more detail in future Annual Reports. - Recommendation 7: Improve transparency of FX management and cross-border capital flow regulations; NBM "will consider improving its transparency on FX interventions decision-making process in a balanced way." - Recommendation 8: Publish the Rules of Procedure of the Executive Board and the Supervisory Board; NBM reports this "recommendation is implemented" and "has published on the website extracts of the Activity Regulations of the Executive Board and the Supervisory Board." - Recommendation 9: Improve confidentiality arrangements, including publishing reasons for rejecting information requests; NBM "will provide a detailed explanation for any decision to reject a request for free access to information" with references to legal provisions. - Recommendation 10: Enhance transparency of relations with the Government by disclosing how cooperation takes place and publishing agreements except sensitive information; NBM will "consult with the Government and its agencies, to revise the content of the published information about existing agreements" and "enhance the transparency of its relations with the Government" within confidentiality constraints. - Recommendation 11: Improve transparency of relations with other domestic agencies by publishing bilateral and multiagency agreements if counterpart agrees; NBM "is committed to explore the experiences of other central banks" and "will Improve the transparency of its relations with other domestic agencies" while keeping sensitive information confidential. *Source: 1mdaea2025001-print-pdf - 57. While the NBM's relations with the Government and its agencies in various activities* ### Annex I. Central Bank Transparency Review—Detailed Review ### Annex I. Central Bank Transparency Review—Detailed Review ### Principle 1.1. Legal Structure: The central bank discloses its legal framework to the public in a manner that is clear and easily accessible - Description - The National Bank of Moldova (NBM) provides information on its legal structure and on the governance of the central bank on its official website. - The relevant legislation and regulations, instructions, decisions and recommendations are all on the website, and it provides an overview of the organization’s objectives, functions and powers. - The website states the strategic plan, including a mission statement, the strategic objectives, as well as the vision and values of the NBM. - The website provides an overview of the corporate governance framework that includes the members of the decision-making bodies, the internal and external checks and balances that form part of the legal framework, and the relationships with external partners, such as the government and its agencies, banks, and other financial institutions in Moldova. ### Legal framework disclosed and website content - Constitutional provisions and links - Article 130 of the Constitution of the Republic of Moldova, entitled Financial System and Credit, provides in paragraph 2 that the national currency of the Republic of Moldova is the Moldovan leu and in paragraph 3 that the National Bank of the Republic of Moldova has the exclusive right to mint, while the bringing about of an issue of money can only be accomplished by a legislative act. - No link is provided on the NBM website to these provisions of the Constitution. - Primary law and annual report references - The NBM discloses that it is governed by the Law on the National Bank of Moldova No 548-XIII of 21 July 1995 (NBM Law), including a link to the law. - The Annual Report 2023 of the NBM mentions that the NBM's authority is based on the NBM law (page 2 and page 162). - Website summaries - The NBM website contains a fairly comprehensive summary of the central bank's objectives, tasks, activities, and powers, which is easily accessible. - It also describes how it relates to the government and briefly indicates how the banking system is supervised. - Laws listed on the English version of the NBM website - Law no. 548-XIII of 21.o7.1995 on the National Bank of Moldova (NBM Law). - Law no. 250 of 01.12.2017 on supplementary supervision of banks. insurers/reinsurers and investment firms in a financial conglomerate. - Law no. 202 of 06.10.2027 on the activity of banks. - Law no. 62-XVI of 21.03.2008 on Foreign Exchange Regulation. - Law no. 114 of 18.05.2012 on Payment Services and Electronic Money. - Law no. 550 of 21.07.1995 on banks liquidation. - Law no. 232 of 03.10.2016 on Banks Recovery and Resolution. - Law no. 234 of 03.10.2016 on Single Central Securities Depository. - Additional laws on the Romanian version of the NBM website - Law no. 1 of 16.03.2018 on non-bank lending organizations. - Law no. 139 of 21.06.2007 to savings and loan associations. - Law no. 122 of 29.05.2008 regarding the credit history offices. - Law no. 106 of 21.04.2022 on the mandatory motor civil liability insurance for damages caused by vehicles. - Law no. 92 of 07.04.2022 on the insurance or reinsurance activity. - Law no. 183 of 11.09.2020 on subsidized insurance in agriculture. - Law no. 1553 of 25.02.1998 on the mandatory civil liability insurance of carriers towards passengers. - Anti-corruption laws - The English version of the NBM website also discloses the anti-corruption laws applicable to the NBM. ### Transparency in decision-making: Law and NBM regulation - Applicable transparency law - According to Article 11(3.3) NBM Law, normative acts issued by the NBM shall fall under the provisions of the Law on transparency in the decision-making process no. 239-XVI of 13.11.2008 (with a Link on the website). - The Law on transparency establishes applicable rules to ensure transparency in the decision-making process within central and local government authorities and other government agencies, which also applies to the NBM. - The law obliges the NBM to provide information about its activities and to consult citizens and other stakeholders when making decisions, such as adjusting the NBM's legal framework. - The law exempts certain decisions and meetings from the consultation process when they hold “official information with limited accessibility’ and if it concerns matters of urgency. - NBM Regulation on transparency - Based on this law the NBM adopted a Regulation on ensuring transparency in the process of drawing up and adopting the decisions of the National Bank of Moldova (no. 230 of 18 October 2010 with amendments). - This Regulation applies in the process of elaboration and adoption by the National Bank of Moldova of draft legislative acts, administrative acts (draft decisions), which may have an economic, social impact (on way of life and human rights, public services, etc.). - Exemptions specified in the NBM Regulation (sections 5 and 6) - Section 5 (quoted): - “Official documents with or without normative character, as the case may be, in the field of monetary (currency) policy related to the establishment of interest rates on monetary policy instruments, the regime of mandatory reserves, the official exchange rate of the national currency, intervention on the monetary (currency) market, of the application of the safeguard measures in the currency field, the results of the analyses, other macroeconomic aspects, as well as the decisions that need to be adopted urgently, can be developed and adopted without consulting the interested parties. The need to urgently adopt the official normative act is brought to the public's attention through an informative note within 10 working days from the date of adoption, by placing it on the official website, by displaying it at the NBM headquarters in a space accessible to the public and/or by broadcast in the central or local mass media, as the case may be.” - Section 6 (quoted): - “The public consultation procedures provided for in this regulation do not extend to the process of elaboration and adoption by the NBM of draft decisions containing official information with limited accessibility under the law.” - Interpretation: - These exemptions mean that in practice only general applicable regulatory acts of the NBM fall under the consultation obligations of the Law on transparency. ### Implementation, coordination, and examples of consultations - Coordinator and reporting - Pursuant to the NBM Regulation on transparency, a coordinator has been appointed who is authorized to coordinate and monitor the general assurance of transparency in the process of drafting and adopting draft decisions within the NBM. - The coordinator of the public consultation process is responsible for drawing up an annual Report on transparency in the decision-making process that provides an overview of the number of decisions taken during the year. - Example of a consultation - Announcement on the NBM website on May 29, 2024, regarding a draft regulation on the capital and liquidity requirements of insurance and reinsurance companies and the amendment of some related normative laws. ### Reporting on public access and communication - Annual Report content (Chapter 9.1) - The NBM’s Annual Report (Chapter 9.1) contains a short paragraph on the implementation of the public access to NBM normative acts, statistics and publications. - Quoted passage from the Annual Report: - “The National Bank pays great attention to the backward link in the communication scheme. Thus, by sending regular and frequent messages, the National Bank provides the necessary explanations on its activity and the functioning of the banking sector. The operation of the interactive database on the website of the National Bank ensures the public access to information, data and analysis and aims to provide accurate, timely, clear and transparent information for the formation of a public opinion on the decisions of the National Bank, as well as for the conduct of various studies and research.” ### Conflicts of law and links - Priority and conflict rules - Certain provisions of the NBM Law clarify their priority over other laws (e.g. Art11(3.3)). - Article 11(4) NBM Law states among other things that; ‘Provisions of other laws can be applied in cases concerning the contestation of the acts of the National Bank of Moldova only to the extent they do not conflict with the provisions set forth in this Law’. - Other normative acts and links - Conflicts of law are mainly resolved according to the general provisions of Article 5 and Article 7 of the Law regarding normative acts (no. 100/2017); legis.md; there is no Link on NBM website to this law. *Report for the National Bank of Moldova — Central Bank Transparency Code—Detailed Review (Annex I).* ### Chapter XI of the NBM Law contains some transitory provisions regarding the ### 1mdaea2025001-print-pdf - Chapter XI of the NBM Law contains some transitory provisions regarding the ### Legal Nature - Article 1: The NBM is the central bank of the Republic of Moldova; an autonomous public legal entity responsible to the parliament. The Annual Report 2023 (page 2) also refers to this legal nature. - Article 3: The NBM is empowered to: - Enter into contracts and issue obligations. - Acquire and dispose of movable and immovable property, in order to exercise its tasks. - For its operational needs. - Take legal action in the court and to take part in proceedings as a subject. - Article 11(1): The NBM has the right to issue regulations, instructions, decisions, and ordinances (normative acts). - Article 11(2): Normative acts of the NBM shall be published in the Official Monitor of the Republic of Moldova. - Article 75: Discloses which sanctions, sanctioning measures, supervision and other remediation measures the NBM may apply. - Disclosed internal regulations and decisions on the NBM website: - Code of ethics and professional conduct of the National Bank of Moldova. - Code of conduct for the employees of the National Bank of Moldova. - Anti-fraud policy of the National Bank of Moldova. - Action plan of the NBM for preventing and combating fraud and corruption. - Not disclosed on the NBM website: Rules of procedure of the Executive Board and the Supervisory Board. ### Legal Protection and Judicial Review - Article 11(6): Administrative actions of the NBM or failure to decide on an appeal brought before the NBM Board of Directors shall be submitted to the Court of Appeal in Chisinau; the article describes the scope and procedure of this judicial review. - Article 11(5): Acts issued by the NBM are not subject to review of their appropriateness. - Article 11(7): Acts issued by the NBM in the field of monetary and foreign exchange policy, including safeguard measures, may be challenged only with regard to their adoption procedure. - Article 11.1: - Paragraph (1): Lists actions of the NBM whose execution cannot be suspended until the administrative court has made a final decision. - Paragraph (2): Suspension of enforcement acts can only be requested in an administrative court after contesting these acts with the Executive Board of the NBM. - Paragraph (3): Sets out the conditions applicable to challenging the contested act. - Asset protection and limits on liability: - Assets held by the National Bank are subject to Law No. 121/2007 and Law No. 29/2018 (with specific features provided by the NBM Law). (No links on NBM website.) - The NBM is not liable for obligations of the state or other authorities or public institutions. - Assets that constitute the state's international reserves cannot be subject to seizure, forced execution, confiscation, requisition, or expropriation. ### Review — Comprehensive Legal Framework (findings) - The NBM provides extensive information on its legal structure and governance; almost all updated relevant legislation can be found on its website. - The NBM Law is well established and provides a clear overview of objectives, functions and powers, including bank supervision and conflict-of-law rules. - The NBM falls (with exceptions) under the Law on transparency in the decision-making process, obliging the NBM to provide information about activities and to consult stakeholders when making decisions. Comments and recommended disclosures: - Publish on the NBM website the Rules of Procedure of the Executive Board and the Supervisory Board. - Explain on the NBM website the provisions of the Constitution of the Republic of Moldova that refer to the NBM (article 130). - Provide links on the NBM website to: - Law no. 100/2017 regarding normative acts. - Law no. 121/2007 regarding the administration and privatization of public property. - Law no. 29/2018 regarding the delimitation of public property. - Explain why the above laws are relevant for the NBM’s activities. ### Principle 1.2 — Mandate: Objectives, Functions, Powers - Objectives (Article 4): - Primary objective: ensure and maintain price stability. - Without prejudice to the primary objective: aim at ensuring stability and viability of the banking system and support the general economic policy of the state. - NBM website: Explains monetary and financial stability objectives, including a medium-term strategy on monetary policy with quantified objectives. - NBM website (English): Discloses main elements of the NBM Strategic Plan for the year 2025, including objectives, mission, vision, and values. - Annual Report 2023, Chapter 9.3: Provides an extensive overview of the implementation of the NBM Strategic Plan for the year 2025 and realization of its strategic objectives. - Functions (Article 5, paragraph 1): Lists tasks of the Bank; many are explained on the NBM website (Information regarding the NBM and History of the NBM). - Powers: - General powers in Article 3 (enter into contracts; acquire and dispose of property; take legal action in court). - More specific powers across Article 5 paragraphs 2-5; Articles 10-11, 15-18, 37, 44, 49, and 59-64. - Article 71: Lists prohibited activities (with some exceptions). - Article 25: Contains specific activities prohibited for employees and decision-making body members. - Some ancillary powers are understood to exist but are not stated in the NBM Law or the NBM website. Review findings and comment: - Objectives, functions, and powers are clearly stated and further explained on the website and in the Annual Report 2023. - Recommendation: Disclose on the NBM website and/or in the Annual Report the ancillary powers of the NBM that are not mentioned in the NBM Law. ### Principle 1.3 — Autonomy (overview and specific dimensions) - Article 6(4): Members of decision-making bodies shall be independent in exercising tasks and shall neither seek nor take instructions from public authorities or any other third party; public authorities and third parties shall not seek to influence members. - Law no. 364/2022 (amending normative laws): Revoked the right of government members to attend meetings of the NBM decision-making bodies. - Court of Accounts involvement: - External public audit regarding legality and regularity of expenditure budgets and investment allocations is carried out by the Court of Accounts, limited (for the NBM) to examination of operational efficiency of management decisions, except those related to implementation of monetary and foreign exchange policy and management of the state's foreign reserves. - NBM Annual Report 2023 (page 164) discloses this involvement. - Court of Accounts audit reports are published on the NBM website; the latest covers the period 2019-2022. - NBM does not disclose whether third parties can attend decision-making body meetings; at the request of the Executive Board, third parties may be invited for an exchange of views (excluding participation in decision-making). Comments: - Recommend disclosing whether third parties can attend meetings. - Recommend explaining on the website what institutional/operational autonomy consists of, how it is implemented in practice, and the rationale for this autonomy. #### Principle 1.3.1 — Institutional/Operational Autonomy - Description: Article 6(4) clarifies independence from instructions; NBM does not disclose if third parties can attend meetings; Law no. 364/2022 revoked government members’ right to attend meetings. - Review: NBM Law clearly stipulates non-interference; website and Annual Report 2023 lack further explanation of institutional/operational autonomy. - Comment: Disclose attendance rules for decision-making body meetings and practical implementation details of autonomy. #### Principle 1.3.2 — Functional Autonomy - Article 6(5): Without prejudice to Article 11(4) and Article 111, any public authority or other third party cannot approve, suspend, cancel, censor, adjourn or condition the entry into force of NBM acts, nor issue ex-ante opinions or otherwise influence issuance of the final act of the NBM. - Article 27(1a): The Executive Board shall establish State monetary policy, including limits of interest rates for monetary policy instruments, conditions for granting loans, type and level of required reserves maintained by banks with the NBM. - NBM website: Clarifies that the BNM has both goal and instrument autonomy. - Review: NBM discloses that third parties cannot suspend or annul decisions and that it has goal and instrument autonomy; website and Annual Report 2023 do not provide further details. - Comment: Explain on the website how functional autonomy operates in practice and its rationale. #### Principle 1.3.3 — Personal Autonomy - Article 23: Discloses duration of term of office for members of decision-making bodies, eligibility and disqualification criteria, appointment and dismissal authorities, and grounds/procedures for dismissal. These rules are explained on the NBM website. - Annual Report 2023 (pages 155-158): Discloses composition of the Supervisory Board and the Executive Board and duration of mandates. - Remuneration: - NBM Law: No provisions on remuneration of decision-making bodies except Article 26(1k) on monthly allowances of members of the Supervisory Board who are not members of the Executive Board. - NBM website: States that the Supervisory Board determines the renumeration fund of the NBM and the renumeration of Executive Board members and determines amount of monthly allowances for Supervisory Board members not on the Executive Board. Does not disclose how Executive Board members are rewarded or the arrangements. - Liability (Article 35(1) and paragraph 2): - Quoted provision: "National Bank, the members of the decision-making bodies of the National Bank, the liquidator appointed by it, and its employees shall not be liable under the civil, administrative or criminal law, for the acts or facts performed or for failure to fulfil certain acts or facts related to exercising the duties conferred to the National Bank by the law, including for performing internal operations circumscribed the exercising of these duties, except for the cases when the judicial court finds the fulfilment or omission to fulfil by these people, with bad-faith, of any act or fact related to the exercise of the National Bank`s duties, which caused damage to third parties." - Paragraph 2: The NBM will reimburse the costs arising from the proceedings against the persons referred to in paragraph 1. - Review: Appointment/dismissal procedures and liability framework are clear; remuneration arrangements are not fully disclosed. - Comment: Disclose internal regulations governing remuneration of decision-making body members and detailed arrangements for determination. #### Principle 1.3.4 — Financial Autonomy - Chapter III (Financial Provisions) stipulates arrangements regarding capital, reserves, provisions, and profit distribution mechanism in line with international best practices. - Includes creation of a general reserve fund and special reserve accounts of unrealized forex gains and losses. - Stipulates rules on distribution of dividends to the Government and provisions for recapitalization of the NBM. - Article 21: NBM can draw up its own budget. - Article 26: Expense estimate and Investment allowances (administrative expenses and capital investments) are approved by the Supervisory Board before the start of the new financial year. - Annual budgeted expenditures and capital allowances are aligned with NBM’s Strategic Plan, disclosed on the NBM website under Corporate governance. - NBM prepares internal financial plans (prognosed streams of income and expenditures) covering streams from monetary policy, foreign exchange policy, foreign reserve management, lending activity and banking services to the state and financial institutions; presented to the Executive Board for monitoring capital adequacy, reserves and funding forecasts. - The regulations and internal decision-making procedures for the determination and expenditure of the budget are not disclosed by the NBM. Comments: - The NBM discloses key financial provisions in law and practices but should disclose the regulations and internal decision-making procedures for budget determination and expenditure. *Source: https://www.imf.org/-/media/files/publications/cr/2025/english/1mdaea2025001-print-pdf.pdf* ### Chapter 13 of NBM’s Annual Report 2023 provides an extensive analysis of the ### Chapter 13 — NBM Annual Report 2023: Financial situation and position (section 13.6 on capital and reserves) ### Legal and accounting framework - Article 66 NBM Law stipulates that the NBM shall maintain at all times accounts and records adequate to reflect, in accordance with internationally accepted accounting practices, its operations and financial condition. - The NBM Law provides comprehensive and clear articles establishing the general arrangements regarding the NBM’s financial resources. These include: - the creation of provisions, - accounting rules for the treatment of forex gains and losses, - rules on distribution of dividends to the government, - provisions for the recapitalization of the NBM. - It is disclosed that the NBM can draw up its own budget and determine its own expenditure. - The regulations and internal decision-making procedures for the determination and expenditure of the budget are not disclosed by the NBM. - The NBM website and the Annual Report 2023 do not contain any further explanation of the financial autonomy of the NBM. ### Transparency and recommended disclosures - Comments: It is recommended to disclose the regulations and internal decision-making procedures for the determination and expenditure of the budget. - The transparency of NBM's financial autonomy would be enhanced by explaining on its website what it consists of, how it is implemented in practice and what it considers to be the rationale for this autonomy. ### Decision-making arrangement (Principle 1.4) - Principle 1.4. Decision-Making Arrangement: The central bank discloses a clear overview of the organizational structure or allocation of responsibilities to its decision-making bodies: policy making, day-to-day management, and internal oversight of the central bank. - Description: Chapter IV of the NBM Law on Organization and Administration contains, among other things, articles specifying the decision-making bodies, their composition, powers, some procedural rules, and the appointment and dismissal procedures of its members. - Article 31 of the NBM Law on the meetings of the Supervisory Board determines who is the chairman, the voting procedures, the frequency and the confidentiality provisions of the meetings. - Article 27(3) NBM Law determines that the meetings of the Executive Board shall take place according to the provisions regarding the meetings of the Supervisory Board. - No further information is provided on the NBM website about how the meetings of the two decision-making bodies take place. ### Disclosure of management, organization, and committees - The NBM website provides an overview of the NBM Management and Organization, including: - the names of the members of the Executive Board and the Supervisory Board, including up to date biographies of their members, - an organizational chart of the NBM that provides an overview of the various departments and indicates the responsibilities of the members of the Executive Board, - a short description of the responsibilities of the various departments, - a statement of the powers of the Executive Board (among other things responsible for general and individual regulatory decisions) and the Supervisory Board, - a description of composition and responsibilities of the Audit Committee, the Investment Committee, and the Risk Committee. *Source: 1mdaea2025001-print-pdf - Chapter 13 of NBM’s Annual Report 2023* ### Chapter 9 of the Annual Report 2023 contains an explanation of the ### Chapter 9 — Institutional and Organizational Framework of the NBM ### Overview - Chapter 9 of the Annual Report 2023 explains the institutional and organizational framework of the NBM, including: - tasks and decisions taken during the financial year by the Supervisory Board and the Executive Board; - overview of activities of the Audit Committee, the Investment Committee, the Risk Committee, and the Business Continuity Committee; - key priorities of the NBM for the year 2024, taking into account the Strategic Plan 2025 of the NBM. - The NBM website provides: - the possibility for the general public to provide suggestions and ask questions (in line with the Law on transparency and the NBM Regulation on ensuring transparency in the decision-making process); - an interactive database to ensure public access to NBM data and analyses, and information about decisions taken by the NBM. ### Organizational structure and decision-making - Disclosed on the NBM website and in the Annual Report: - responsibilities, composition, powers, and some procedural rules for the Supervisory Board and the Executive Board; - names and up to date biographies of members of the Executive Board and the Supervisory Board; - organizational chart of the NBM; - which decision-making body is responsible for general and individual regulatory decisions. - Gaps noted: - detailed provisions on internal decision-making for a wide range of NBM activities are not clarified, particularly how decisions are prepared and what specific rules apply regarding decision-making in these bodies. - Suggested disclosures to increase transparency: - general explanation of how the Executive Board operates and how the Supervisory Board oversees the Executive Board; - publication of annual work plans of the Executive Board and the Supervisory Board; - publication of charters and work plans of the Investment Committee, the Risk Committee, and the Business Continuity Committee. ### Risk management (Principle 1.5 and sub-principles) - Principle 1.5: central bank discloses principal risks (financial, operational, legal) and framework to manage these risks, including risk governance and risk strategy. - Principle 1.5.1 — Risk exposure: - The 2023 Annual Report (Risk Management and Internal Controls section) positions risk management as central to decisions and policy-making and provides a high-level overview of developments in key risks and the NBM’s risk exposure. - The National Bank aligns its risk management with ISO 31000 and best practices, including IORWG guidance. - FY 2023 financial statements (Note 4. Risk Management) provide detailed disclosures on exposures to principal financial risks (credit, market, liquidity), mitigation measures, and quantified demands on the NBM’s financial resources/buffers, and references to quantification methods. - FY 2023 financial statements disclose operational risk management and roles/responsibilities in the risk management process; Note 4.6 addresses disinflationary pressures, regional crisis, and measures taken; Note 4.7 discloses information on climate risk. - Risk management process, appetite, and development objectives are outlined on a dedicated risk management and internal control webpage on the NBM website. - Review finding: exposures to key risks are clearly disclosed and explained; risk statement and clear mapping of key risks to the NBM’s mandate were not in the FY 2023 Annual Report but were disclosed on the website in November 2024. - Principle 1.5.2 — Risk framework: - Detailed information published in FY2023 Annual Report (Section 9), Financial Statements (Note 4), and dedicated website section. - Governance alignments: Framework on Operational Risk Management (approved by the Supervisory Board) aligns internal control and operational risk management governance with COSO, ISO 31000, and leading practices. - Legal assignments: - NBM Law Art. 26(1)(b): Supervisory Board adopts standards of the internal control system and continuously verifies and evaluates its functioning. - NBM Law Art. 28(3)(b): Audit Committee monitors efficiency of internal control system and risk management. - Committees and roles disclosed on website: - Risk Committee: second line of defense; assists Executive Board; consists of 8 voting members, including a member of the Executive Board—the Chair of the Committee. - Investment Committee: assists Executive Board on investment policies related to management of the state's foreign exchange reserves; consists of 10 members, employees of the NBM, including 2 members of the Executive Committee, one of whom is the chairman; Regulation on the attributions, competences and functioning of the Investment Committee is published. - Business Continuity Committee: assists Executive Board to achieve continuity objectives; made up of heads of subdivisions that manage critical processes (all with the right to vote) and the Comptroller General as observer; Chairman is the Governor of the NBM; Regulation on activities of Risk Management Committee is published. - Risk management lines of defense: - NBM uses a three lines of defense model. - Second line organizes, coordinates, and independently oversees internal control and risk management; represented by dedicated functions including the Investment Committee, Risk Committee, and Business Continuity Committee. - Website provides extract from Framework of Operational Risk Management referencing processes of identification, evaluation and mitigation of risks. - Review and comment: - Annual Report provides overview of risk and governance arrangements and risk management process and describes one or more risk strategies (e.g., collateralization of lending activities, limits in investment operations). - Recommendations for enhanced disclosure: - description of the process of continuous identification, evaluation, and mitigation of risks; - disclosure of any developments in the NBM’s risk framework; - high-level overview of policies and arrangements for times of crisis. ### Accountability framework (Principle 1.6 and sub-principles) - Principle 1.6: central bank discloses accountability framework providing transparency and reporting mechanisms to internal decision-making bodies, political institutions, and the public. - Principle 1.6.1 — Arrangements: - Articles 33 and 65-69 of the NBM Law prescribe accountability and reporting framework, including financial reporting, internal audit, and external audit. - Independently audited financial statements: - Articles 67 and 68 of NBM Law: annual financial statements prepared in accordance with IFRS and audited in accordance with IAS by an independent auditor’s firm, confirmed by the Supervisory Board on a five-year rotation basis. - Audited annual financial statements approved by the Supervisory Board per Article 26(1)(a) and published on the NBM’s website within five months after year-end per Article 33 of Law no. 287/2017 on accounting and financial reporting and Article 69 of the NBM Law. - Annual audited financial statements are submitted to the Minister of Finance as provided in Article 19(6) of the NBM Law for capitalization or profit distribution information. - Article 69: by June 1 of the next year, annual financial statements and auditors’ report, approved by the Supervisory Board, and other information are sent to Parliament, the President, and the Government. - Published financial statements disclose basis of preparation as IFRS, full compliance with IFRS, and date authorized for issue by the Supervisory Board; clearly identified as audited. - In accordance with IAS and Article 28 of Law no. 271/2017 on audit of financial statements, auditors’ report includes opinion on consistency between the annual report and the financial statements and compliance with legislation. - Article 67(2): NBM prepares semi-annual individual condensed financial statements and, as may be, consolidated financial statements, in accordance with IAS 34 "Interim Financial Statements.” - Internal audit: - NBM Law Article 33: NBM shall have an internal audit function subordinated to the Supervisory Board; provisions on appointment, eligibility, term, dismissal/resignation of chief internal auditor and duties of internal audit function. - Internal Audit Charter (approved by Supervisory Board under Regulation on Internal Audit Department) defines purpose, powers, responsibilities; internal audit is functionally independent and organizationally separated; Chief Internal Auditor reports to the Governor (administrative) and to the Audit Committee and Supervisory Board (functional). Article 9 of the Audit Charter: Audit Committee monitors effectiveness and efficiency of internal audit. Article 28(3)(c) of NBM Law adds Audit Committee oversees and directs the internal audit function. - Audit Committee: - Composition and role (NBM Law Article 28 and website): - Audit Committee consists of three members of the Supervisory Board that are not employees of the National Bank. - Duties: (i) monitor the process of financial reporting of the National Bank; (ii) monitor the efficiency of the internal control system and the risk management; (iii) monitor and direct the internal audit function; (iv) monitor the independence and the activity of the external audit; (v) participate in selection process of the audit entity indicated in Article 68(1) and present recommendations to the Supervisory Board regarding confirmation, mandate, and evaluation of the respective entity's activity. - Article 28(4): detailed areas of competence established by internal regulation approved by the Supervisory Board; the website contains the Regulation on Audit Committee. - Per the Regulation, the Audit Committee prepares a summary report on its work that will be included in the annual report; Article 28(5) requires the Audit Committee to submit at least annually reports to the Supervisory Board with recommendations. - Short bios for each Audit Committee member are available on the website; composition specified in the Annual Report. - Review finding: accountability arrangements are explicitly provided in legal framework, website, and Annual Report. - Principle 1.6.2 — Tools: - Independently Audited Financial Statements: - AFS are in accordance with IFRS. - AFS with the opinion of the independent external auditor dated April 29, 2024, were approved by the Supervisory Board and published within statutory deadlines. - AFS for 2023, with the opinion of an independent auditor, were published on the NBM website on May 15, 2024. - Notes to the Financial Statements disclose significant accounting policies, accounting standards and compliance frameworks; provide sufficient information to assess and understand the NBM’s financial performance, use of funds, and transactions with the government and other stakeholders. - Chapter 13 of the Annual Report (Financial analysis) discloses analysis of key financial indicators, explanation of activities and recognition in financial statements, and explanation on factors driving main results and elements of financial position. - Internal Audit: - Website provides clear description of internal audit function and mandate executed in conformity with IIA Standards (IPPF) and enshrined in the Charter approved by the Supervisory Board. - Internal Audit Charter is under review to be aligned with IIA Global Standards effective January 9, 2025. - 2023 Annual Report includes activities of the Internal Audit Department (pages 195-196) disclosing: main objectives; alignment with IPPF; compliance with IIA Standards per External Quality Assessment report dated March 17, 2021, and actions to implement approved action plan; degree of completion of annual internal audit plan and coverage of the audit universe. - Audit Committee: - Audit Committee charter under Regulation on Audit Committee is on the website; NBM plans to revise this regulation in 2025. - 2023 Annual Report discloses Audit Committee activity (pages 166-169), including composition and general overview of activities. - Review comment: transparency could be enhanced by providing more detailed information on Audit Committee activities in the Annual Report. - Principle 1.6.3 — Anti-corruption measures and Code of Conduct: - Supervisory Board adopts rules of professional ethics in the National Bank per NBM Law. - Integrity Law requires public entities to publish ethics and deontology norms on their website; Art. 2 of Integrity Law aims to promote integrity and zero-tolerance attitude towards corruption. - The Code of Ethics and Professional Conduct of the NBM is fully published on the website and applies to: - NBM employees, members of management bodies, members of the Audit Committee, interns, other individuals acting on behalf of the NBM, and employees with suspended employment contracts. - Code of Ethics includes provisions on: - Conflicts of interest management (pt. 31). - Incompatibilities, hierarchy restrictions and advertising limitations (pt. 32). - Undue influences (pt. 33) — managed according to Government Decision no. 767/2014 and internal regulations. - Regime for declaration of wealth and personal interests (pt. 35) — per Law no. 133/2016 employees must submit declarations upon hiring, appointment, reinstatement after suspension, annually, and at resignation. - Gifts (pt. 36) — managed according to Government Decision no. 116/2020 and internal regulations; NBM publishes Register of gifts received and declared. - Procurement (pt. 37); Foreign and international relations (pt. 38); Internal relations (pt. 39); Protection measures (pt. 40); Use of the NBM's resources (pt. 41). - Protection of professional secrecy (pt. 44-48); personal financial transactions and conflicts (pt. 49-59); external activities by employees (pt. 60-67). - Compliance and Ethics Framework section on website summarizes: Code of Ethics principles, Anti-Fraud Policy, Integrity Warnings, access to Anti-Corruption Line, Anti-Money Laundering and Combating Terrorism Financing measures, Information Security Policy, public access to normative acts, NBM statistics and publications. - Anti-Fraud Policy published on website and summarized in the 'Compliance and Ethics Framework' and in the Annual Report (section 9.1, p.167). - Whistleblowing: information on illegal practices disclosure system and contact details for anti-corruption line are disclosed. - Relevant Moldovan laws applicable to the NBM: - Law on integrity nr.82/2017. - Law on the assessment of institutional integrity nr.325/2013. - Law on the declaration of assets and personal interests nr.133/2016. - Law on the protection of whistleblowers nr. 165/2023. - Law on the approval of the Regulation on the functioning of anticorruption telephone lines nr.252/2013. - Examples of anti-corruption measures: - External Audit: annual financial reports subject to annual external audit in accordance with International Standards on Auditing by reputable audit organization. - Audit of the Court of Accounts: audits legality and regularity of expenditure and investment allowances; excludes monetary and currency policy and management of state international reserves. - External Assurance: Safeguards Assessment of the NBM by the IMF; Oversight by the Supervisory Board (4 out of 7 members are not employees of the National Bank and are appointed by the Parliament) — Law on the National Bank of Moldova (Art. 22, 23). - Internal Assurance: Law on the National Bank of Moldova (Art. 33) requires internal audit subordinated to and reporting to the Supervisory Board. - Review conclusion: domestic anti-corruption legislation applies to NBM officials; Code of Ethics is published and establishes norms to prevent conflicts of interest and corruption; asset declaration requirements and whistleblowing information are available. - Comment/suggestion: NBM could enhance disclosure by publishing details on implementation of the Code of Ethics and internal controls used to monitor compliance and detect breaches. - Principle 1.6.4 — Human capital management: - Department of Strategy, Organization and Human Resources responsible for human capital management per Article 34 of NBM Law and the Labor Code. - NBM 2025 Strategic Plan includes two strategic objectives linked to human resources: - Strengthening institutional resilience and agility and developing and leveraging human capital. Operational objectives include strengthening institutional capacity (including in context of taking over supervision of non-banking financial sector), strengthening governance and organizational culture, developing and promoting NBM’s image as an employer. - Developing and leveraging human capital. Operational objectives include developing integrated human resources management system, creating motivating work environment, continuous professional development, developing internal training center and knowledge transfer capabilities, developing leadership and management skills. - Personnel policy objectives and website statement: - Strategic approach to management of human resources covering recruitment, selection, hiring, onboarding, performance management, professional development, compensation, benefits, employee relations, and compliance with labor relations regulatory framework. - Website sections and disclosures on governance and human capital: - Management and organization: governing bodies, bios, organizational chart, department descriptions. - Human Resources - Career: Recruiting, Professional development, Organizational culture, Succession, Diversity and inclusion, Statistics. - Annual Report 2023 HR data includes: - general information about employees (gender equity, studies), HR management processes (hiring, resignations, transfers, promotions) with emphasis on internal mobility, number employed and resigned classified by gender, average age of employees, and retention at NBM. - general information related to salary system: relationship between value of position and salary level, ensuring internal equity and external competitiveness. - audited financial statements contain remuneration and compensation expenses related to governing bodies and high and mid-level management. - As NBM employees are subject to Law on Declaration of wealth and personal interests, salary information can be found on National Integrity Authority declarations portal at portal-declaratii.ani.md. - Review status: NBM publishes an array of information on human capital on website and in the annual report. *Source: Chapter 9 of the Annual Report 2023 (NBM institutional and organizational framework), as provided in the supplied content.* ### references related to the management of its human resources, including on ### References related to the management of its human resources, including on staff development, diversity and inclusion, recruitment, and retention ### Communication (Principle 1.7) - Findings - NBM discloses organizational structure and communication processes: - Regularly publishes an updated Organizational Chart detailing department responsibilities. - Communication and Financial Education Division manages external communications with: the media (local and international), the public, financial institutions, the academic community, Parliament of the Republic of Moldova, government entities and national regulatory authorities, and international institutions. - Dissemination channels include: Press releases; Publications and analytical materials/bulletins; Statistical reports through Interactive Database (IDB); Interviews with the bank's leadership; Press conferences and briefings; Special events and public appearances; Multimedia materials (video spots, video graphics, infographics, photos, etc.). - All communications published in Romanian and English and made available on the official NBM website and official social media accounts (Facebook, LinkedIn, Youtube). - Reference publications listed: Monetary Policy Decisions, Annual Report, Inflation Report, Statistical Yearbook "International accounts of the Republic of Moldova”, Financial Stability Report and analytical materials on international accounts, etc. - External Communication Strategy exists but is not published; an extract is on the NBM website under "External communication of the National Bank of Moldova". - Communication plans: quarterly communication plans prepared by the Communication Division; results reported to high management; Annual Report discusses key developments related to external communication (see Section 11). - Feedback/monitoring: NBM receives requests and visits; monitors page and social media views; receives over 420 requests for information in 2023 via electronic mail/telephone and over 450 requests/questions from citizens via Facebook (redirected to subdivisions or solved within statutory limits). - Tools and channels enumerated: Press releases; official publications; media interviews; public appearances of senior management; briefings; press conferences; public events; conferences and seminars; calendars; Q&A on webpage; social media posts; podcasts; multimedia products. Channels: Mass media; Official webpage; Social media; Media platforms; Events of other institutions; Financial education events and projects. Target groups: Public; Public authorities; Banks; International organizations; The business environment; The academic environment; Economic experts. - Gaps / Recommendations (from Review & Comments) - NBM does not disclose detailed information on internal principles, guidelines, and processes for external communication. - NBM does not evaluate its communication policy with the public publicly. - Recommended actions: - Define clear communication objectives with specific measurable targets and a pre-determined horizon in the communications strategy (currently unpublished). - Implement evaluation systems (surveys, stakeholder feedback) to assess communication effectiveness and inform improvements. - Tailor communications to the general public with simplified explanations and targeted videos; conduct regular literacy surveys to assess evolution in public understanding and use results in research analyses. - Continue and expand initiatives for children and the academic audience. ### Confidentiality and Access to Information (Principle 1.8) - Findings - Institutional arrangements regulated by: - Law No. 148/2023 on access to public information. - Article 36 of Law No. 548/1995 on the National Bank of Moldova. - Articles 126-135 of Law No. 202/2017 on banking activity. - Article 103 of Law No. 114/2012 on payment services and electronic money. - NBM has a dedicated webpage for Requests for information of public interest and petitions; includes standard forms and outlines procedures. - When rejecting requests, NBM elaborates reasons with reference to Article 23(2) of Law No. 148/2023. - 2023 Annual Report: NBM processed over 420 requests for information and more than 450 Facebook requests/questions (redirected or resolved within statutory limits). - Gaps / Recommendations - NBM does not publish information related to rejection of access requests. - NBM does not disclose whether it sought stakeholder input on its confidentiality policy or explain consequences of legislative amendments. - Recommended actions: - Consider publishing statements explaining reasons for rejecting access requests, especially where high public interest exists. - Provide high-level statistics and topics about access-to-information requests in the Annual Report. ### Monetary Policy (Pillars II & III: Principles 2.1 and 3.1) - Findings - Mandate and framework: - Law No.548/1995: primary objective to ensure and maintain price stability. - NBM implements a direct inflation targeting regime with explicit medium-term inflation target: inflation target of 5.0 percent annually, with a possible deviation of ± 1.5 percentage points, and operates a managed floating exchange rate regime without a determined target for MDL exchange rate. - Operational framework: open market operations are main instrument to influence short-run interbank interest rates; standing facilities and reserve requirements also used. - Explanatory articles and Financial Education content available (in Romanian) including FAQs and technical boxes. - Decision-making and disclosure: - Press releases on monetary policy decisions published the same day as Executive Board meetings. - Executive Board meetings held according to a schedule approved in the fourth quarter for the following year; calendar published on NBM website. - Infographic with updated NBM Interest rates is updated same day as decisions; Interactive Database updated same day; summaries of minutes published six months after meetings as part of the Inflation Report. - Inflation Report produced quarterly with an eight-quarter horizon forecast, including risks and uncertainties; Governor presents quarterly and holds press conferences on day of publication. - Operational details: - Weekly auctions are main channel for liquidity operations; calendar of monetary policy operations published annually in November for next year. - Reserve requirement framework summarized; detailed in Regulation 302/2019; Regulation 139/2019 sets remuneration and fees for required reserves; Regulation 171/2018 sets credit standing facility terms; Regulation 65/2003 defines overnight deposits. - Eligible counterparties for monetary operations are banks licensed by the NBM; Regulation 188/2014 governs open market operations. - Data and publications: - Base rate, standing facilities, and reserve ratios disclosed same day as decisions; interactive database publishes required reserves data monthly; aggregated bank balances and autonomous liquidity factors published monthly in Monetary Survey; detailed monthly data on volume, interest rates, and maturities of monetary operations published. - Gaps / Recommendations - Consider publishing minutes of monetary policy meetings within a reasonable timeframe (max 3 weeks) and attribute dissenting votes when decisions are not unanimous. - Consider disclosing scenario analysis and the models used for inflation forecasts and scenario analysis to better inform decisions. - Consider publishing methods and techniques underlying dedicated monetary policy evaluations. ### Cross-Border Flows, FX Administration, FX Management, and Reserve Management (Principles 2.2–2.4, 3.2–3.4, 4.2–4.4) - Findings - Legal framework and responsibilities: - Law No. 548/1995 assigns FX regulation responsibilities to the NBM (Article 5, para (1) point (l)); Law No. 62/2008 (Law on Foreign Exchange Regulation) outlines FX regulation principles. - NBM retains exclusive authority in implementing policy decisions, issuing/withdrawing licenses, and regulating FX entities (Articles 50, 51). - Article 11(1) of NBM Law allows issuing decisions, regulations, instructions, and orders; publications appear in Official Monitor, legis.md, and NBM website. - Republic of Moldova subject to Association Agreement (AA) effective June 2014, mandating conditions for applying EU rules on free movement of capital. - FX policy, interventions, and disclosure: - Monetary Policy Strategy: FX interventions used to support effects of open market operations to achieve inflation target; may mitigate excessive exchange rate fluctuations, stop speculative operations, and replenish international reserves without prejudice to inflation objective. - Individual FX intervention decision-making process not disclosed; Annual Report publishes aggregate (semi-annual) FX intervention amounts and directions; monthly reporting with one week lag of drivers of changes in foreign reserves including gross sales and purchases of FX. - NBM discloses FX reserve management Regulation (pursuant to Articles 5 and 53 of Law No. 548/1995); eligible instruments listed (foreign currency banknotes/coins/accounts, liquid securities, gold, deposits). - Reserve management governance and practices: - Investment Committee and Risk Committee terms of reference available on NBM website; extract of Regulation on Investment Committee published describing decision-making process. - Investment Committee composition: Chairman, nine members from NBM, and a Secretary; meets monthly or as needed. - Executive Committee (per 2023 Financial Statement, p.34) assumes responsibility for establishing investment horizon, normative currency composition, minimum rating for investments, approving strategic benchmarks, duration and deviations, maximum limits on instruments and counterparties/issuers, and decisions on external asset management transfers (implicitly indicated). - 2023 Financial Statement discloses reserve composition, maturity, structure, derivatives, credit risk by rating, liquidity and settlement risks, and currency distribution; Chart 2.48 of 2023 Annual Report provides detailed reserve adequacy assessment. - Reserve counterparties selection criteria: minimum average rating A-1 for counterparties and minimum AA- for foreign currency securities issuers (2023 Financial Statement, p.39). - Gaps / Recommendations - NBM does not disclose its decision-making structure, process, and authority for FX interventions — recommended to disclose decision-making process for all FX management instruments (terms of reference, Annual Report section, or standalone website section). - Consider publishing the Investment Policy document to improve reserve management transparency. - Consider ex-post disclosure of Investment Committee deliberations with a defined lag and publishing analysis backing strategic investment and risk policy changes. - Consider publishing a high-level capital account liberalization roadmap and more detailed considerations underlying FX policy decisions. ### Macroprudential Policy and Financial Stability (Principles 2.5, 3.5, 3.6, 4.5) - Findings - Legal and institutional framework: - NBM Law amended to clarify macroprudential mandate (art. 5_1 and 5_2); NCFS (National Committee on Financial Stability) designated national macroprudential authority by Law No.209/2018. - NCFS composition: Governor of the NBM (Chairman), Minister of Finance, Minister of Economy, President of the National Financial Market Commission, General Executive Director of the Deposit Guarantee Fund; extended composition includes NBM executive members. Decisions by simple majority vote; each member has one vote. - NCFS duties include coordinating systemic crisis management, proposing measures to government/authorities, issuing official statements, adopting crisis communication policy, adopting national action plan in emergency situations, and monitoring implementation of recommendations. Recommendations follow "execute or explain" principle. - NBM provides logistics and secretarial work within NCFS. - Macroprudential strategy and tools: - Strategy on Macroprudential Policy disclosed; press release on approval by NCFS in October 2023. - Macroprudential toolkit includes capital-based instruments (countercyclical capital buffers), asset-side instruments (loan-to-value, debt-to-income), ratio caps (liquidity coverage ratio, net stable funding ratio). Examples of adopted measures: - Regulation on capital buffers of banks (Decision no.110, 24 May 2018). - Regulation on responsible lending to consumers by banks (Decision no.101, 19 May 2022; in force from July 01, 2022). - Regulation on responsible lending for non-bank lending organizations (Decision no.20/5, 20 May 2022; in force from September 01, 2022). - Methodology for identification of systemically important institutions (O-SII). - Technical Note on the Residential property price index (RPPI). - Financial Stability Report (FSR) published annually with key indicators: credit growth, household and corporate indebtedness, liquidity, market risks; includes indicators for Countercyclical Capital Buffer (CCyB), RPPI technical note, O-SII methodology. - Stress testing and use of results: - NBM conducts regular stress testing using macro-econometric frameworks; stress testing covers solvency (credit, market, operational risk), liquidity risk, and contagion; results used to assess resilience and inform calibration of capital and liquidity requirements. - 2022 liquidity stress tests: one-month horizon; results found no liquidity shortfalls at individual or aggregate banking sector level; domestic banking sector liquidity risk considered low. - 2023 stress tests confirmed high liquidity of banking sector and ability to withstand deposit withdrawals at historical maximum rates; no liquidity shortages or breaches of prudential requirements recorded for applied stress scenarios. - Results published at aggregated level in FSR. - Governance and enforcement: - NBM discloses enforcement mechanisms and responsibilities; explicit macroprudential mandate included in Law No.548/1995 amendments (art. 5) dated August 02, 2024. - NBM empowered to apply macroprudential measures through normative or individual administrative acts; Law No.202/2017 art.63 empowers NBM to set macroprudential requirements for banks. - Gaps / Recommendations - Provide more details on NCFS operations: operational procedures, topics discussed, meaningful summaries of outcomes to benefit external stakeholders. - Disclose rationale and expected transmission channels of macroprudential instruments. - Disclose stress testing modalities in greater detail: type of exercise (bottom-up/top-down), scenario design, risks covered, models used, assumptions, exercise coverage and bank identifiers where appropriate. - Consider presenting FSR in a more transparent way via a financial stability forum to stimulate debate and share outcomes with decision-making authorities and sector participants. - Publish regular ex-post evaluations and dedicated analytical studies assessing whether macroprudential objectives have been achieved. ### Emergency Liquidity Assistance and Market-wide Liquidity (Principles 2.7, 3.8, 4.7) - Findings - Legal and regulatory basis: - Article 18 of NBM Law: NBM may grant loans to banks under terms established periodically, collateralized with eligible securities and assets; loans can be payments in advance, loans, purchases, sales of financial instruments; NBM sets minimum interest rates and eligibility criteria. - Regulation No. 188/2014 on open market operations details loan granting provisions and modalities. - Norms on evaluation of assets accepted by the NBM as collateral disclose valuation methodology and haircuts applied (minimum haircuts; NBM may apply higher haircuts). - Article 18_1 of NBM Law and Regulation No. 343/2019 on Emergency Liquidity Assistance (ELA) set ELA framework: - ELA may be provided to solvent and viable banks facing temporary liquidity problems, at NBM discretion, for up to three months with option to extend up to one year; interest rate greater than marginal lending facility rate. - Regulation No.343/2019 covers principles, conditions, types of acceptable collateral, collateral mobilization/execution, and NBM actions in case of non-compliance. - ELA framework overview provided in a technical note in the 2022 Financial Stability Report (page 69); ELA framework strengthened with IMF technical assistance. - Practice and disclosure - No market-wide liquidity support via loans since 2009-2010. - During COVID-19, NBM used lower reserve requirement and narrower standing facilities corridor; actions disclosed in a detailed Q&A on COVID-19 emergency measures. - Since introduction of ELA framework in 2019, no ELA has been requested or provided. - NBM applies strict confidentiality to potential ongoing ELA operations; may disclose relevant elements if necessary to restore confidence. - Haircuts for collateral are disclosed in norms (minimum haircuts disclosed; international best practice recommends against disclosing ELA haircuts). - NBM may consider ex-post disclosure of repaid ELA loans subject to confidentiality considerations and discussion with external auditors. - Gaps / Recommendations - ELA communication strategy: prepare ex-post communication strategy described in internal procedures and include in regular ELA simulations. - Consider publication of limited ex-post information on repaid ELA loans in Annual Report where confidentiality and financial stability considerations allow. ### Anti-Money Laundering / Countering the Financing of Terrorism (AML/CFT) (Principles 2.10, 3.11, 4.10) - Findings - Legal and supervisory responsibilities: - Law no.308/2017 art.15(1): NBM is supervisory authority for banks; non-bank payment service providers; foreign exchange units; insurers/reinsurers within life insurance classes with investment participation; non-banking credit organizations; savings and loan associations. - Art.5(1)(q) of Law no.548/1995 confirms NBM acts as supervisory authority for reporting entities per Law no.308/2017. - NBM publishes supervisory priorities for AML/CFT annually on its webpage. - Internal AML/CFT framework: - NBM approved an internal AML/CFT Regulation in 2017 setting mandatory requirements (risk identification, KYC/EDD, correspondent banking measures, PEP measures, transaction monitoring, STR reporting, record-keeping, internal control requirements including training, internal audit, appointed AML/CFT officer, screening lists). - Internal AML/CFT Regulation is not publicly available (deemed internal and subject to professional secrecy per art.36 of Law no.548/1995) but is available to counterparts and interested future banking correspondent clients; NBM submits KYC questionnaire to correspondent banking partners annually. - NBM publishes normative acts related to ethics, compliance and anti-fraud policies. - Supervisory activity and outcomes: - NBM publishes annually in its Annual Report a dedicated section on regulation and supervision in AML/CFT area including: newly approved AML/CFT normative acts/recommendations; drafted/reviewed AML/CFT acts; number of onsite/offsite controls; main violations; sanctions applied; cooperation with stakeholders; newly developed/implemented actions. - Office for Prevention and Combat of Money Laundering also publishes related reports; NBM reports semi-annually/annually to that Office as part of national AML/CFT Strategy 2020-2025 and Action Plan, with summaries published on Parliament webpage. - NBM publishes information on sanctions applied to supervised reporting entities, but decisions related to AML/CFT sanctions are not publicly available due to sensitivity. - Internal controls and resourcing: - Internal Audit Department performs periodic assurance engagements and may assess compliance with AML/CFT internal regulation; Regulation No.48/2017 is available on the internal website only. - NBM publishes an extract of Operational Risk Management Framework and annual disclosures of operational risk profile (Annual Report pt. 9.1, Annex A.37, Figure references). - Gaps / Recommendations - NBM does not publish general description of internal AML/CFT Regulation or public summaries of internal AML/CFT control activities and staffing/resources allocated to AML/CFT supervision and controls. - NBM does not periodically publish outcomes of internal AML/CFT controls or assurance engagements. - Recommendations: - Publish an overview of NBM's risk-based supervisory approach and main principles. - Consider publishing a general description of internal AML/CFT Regulation, main risk mitigating measures, and activities that give rise to ML/TF risks. - Provide statistics on staffing and resources for AML/CFT supervision and internal AML/CFT control activities (e.g., assurance engagement summaries) as appropriate. - Consider publishing names of institutions sanctioned for AML/CFT breaches and enforcement actions where this does not threaten financial stability or ongoing investigations. ### Governance, Accountability, and Relations with Government & Domestic Agencies (Pillars IV & V) - Findings - Accountability and reporting: - NBM is an autonomous public legal entity responsible to the Parliament (NBM Law No.548/1995, article 1). - Article 69 of NBM Law: submit Annual Report to Parliament by June 1 containing audited financial statements, activity and operations for the financial year, and economic situation of the State; submit quarterly reports to Parliament and Government with macroeconomic analysis and medium-term forecast on inflation and main macroeconomic indicators (published within indicated time limits). - NBM uses press releases, Inflation Reports (quarterly), Annual Reports and Governor press conferences and speeches to inform public and stakeholders. - Relationship with Government: - NBM Law articles (6, 8, 10, Chapter V Articles 37-43, Article 69) stipulate cooperation with government: NBM acts as banker and agent of the state (Article 37), accepts deposits of Ministry of Finance under market conditions (Article 39), acts as state agent for placement of government securities (Article 40), forbidden from purchasing government securities on primary market but may trade in secondary market (Articles 41 and 42), advises government on budget and public sector borrowings (Article 38). - Medium-term monetary policy strategy (chapter 12) states NBM cooperates with government and public authorities and exchanges information on regulated price changes, fiscal policy strategy and other measures impacting inflation. - NBM provides three-year forecast of capital allocations/profit distributions to Ministry of Finance for medium-term budget framework. - Agreement between Minister of Finance and NBM on placement of State Securities no.129/2018 and Regulation no.170/2018 published on NBM website; Annual Report 2023 (Chapter 13, pages 207-209) describes banker/agent tasks. - Interaction with domestic agencies: - NCFS defined by Law no.209/2018; NBM provides logistics and secretarial support. - AML/CFT cooperation: MOU with Office for Prevention and Combat of Money Laundering exists but is not published. - Resolution framework: Law no.232/2016 on recovery and resolution of banks defines cooperation with Deposit Guarantee Fund in the Banking System (DGFBS), Ministry of Finance, and Public Services Agency (PSA); information on agreements disclosed in Q&A on NBM website. - Statistical/data collection rights: Art. 47 and Art. 72 of NBM Law provide rights to collect data from banks and other legal entities; NBM publishes statistical information and interactive database as per Regulation No.158 (9 July 2020). - Gaps / Recommendations - NBM does not disclose practical working arrangements with government (working groups, coordination committees, bilateral meetings) or MOUs/agreement texts (where not sensitive). - Policies and terms governing financial transactions with government (other than State Securities placement) are not fully published (e.g., regulations pursuant to Article 39 not public). - Recommendations: - Publish practical arrangements and cooperation procedures with government and other public institutions, and disclose MOUs or agreements where counterparties agree. - Regularly publish policies and conditions for services provided to government (current account management, deposits, advances, guarantees) to increase transparency. - Consider explaining how interaction with other policies (monetary, macroprudential, fiscal) takes place in practice. *Source: 1mdaea2025001-print-pdf - references related to the management of its human resources, including on staff development, diversity and inclusion, recruitment, and retention (PDF).* ### 1. With the Deposit Guarantee Fund in the banking system (DGFBS): ### 1. With the Deposit Guarantee Fund in the banking system (DGFBS) ### Legal and institutional links - Law No.232/2016 on the recovery and resolution of banks — art. 279(1)(a), art. 284 (1)(a), art. 285, art. 288(f), art. 289-291, art. 307(2). - Regulation regarding the method of calculation and payment of contributions to the bank resolution fund no.74 of 20.03.2020 — point 21 of the Regulation. - Cooperation agreement between the NBM and the DGFBS (dated 01.13.2020) establishing cooperation in exchange of information related to the banking sector and funds managed by the DGFBS (the bank deposit guarantee scheme and the bank resolution fund). ### Disclosure status - The NBM does not currently disclose the agreements with DGFBS and PSA. - This information is specified in point 20 of the Frequently Asked Questions Regarding Bank Resolution. ### 2. With the Ministry of Finance ### Legal and institutional links - Law 232/2016 on the recovery and resolution of banks — art. 5, art. 279(1)(b), art. 284 (1)(b), art. 285, art. 288(b). - Collaboration agreement between the Ministry of Finance and the National Bank of Moldova regarding the application of bank resolution tools (dated 02.25.2019) establishing the mode of collaboration in the area of competence of the NBM and DGFBS. ### 3. With the Public Institution "Public Services Agency" (PSA) ### Legal and institutional links - Law 232/2016 on the recovery and resolution of banks — art. 135. - Collaboration agreement (dated 06.10.2020) establishing the way of collaboration in the areas of competence of the NBM and DGFBS. ### Macroprudential governance and disclosures ### NCFS framework and responsibilities - The Law on the National Financial Stability Committee defines NBM Governor as Chairperson of the NCFS and sets organization and functioning to: - coordinate implementation of macroprudential policy; - prevent, mitigate, or eliminate risks threatening systemic financial stability; - manage systemic financial crises. - NCFS objectives include fostering the achievement of macroprudential goals, proposing crisis-preparation and emergency actions, and proposing prompt actions during systemic crises. - NCFS responsibilities include coordinating management of systemic financial crises and proposing policies/measures to the Government and other competent authorities aimed to protect deposits, recapitalize banks, and restore confidence. ### NCFS Extended Committee - Includes Executive Board members of the NBM responsible for financial stability, banking supervision, banking resolution, and the Head of the Financial Stability Department of the NBM. - Responsibilities: identifying, monitoring, and evaluating systemic risks; recommending recognition of macroprudential instruments from other states; approving macroprudential policy strategy; ensuring cooperation and communication agreements. ### NBM Macroprudential Policy Strategy and disclosures - The NBM Macroprudential Policy Strategy is published on the NBM website and establishes the operational framework for achieving macroprudential objectives, ensuring transparency and predictability of decision-making. - Disclosures of policy measures are made through press releases by the NBM and NCFS and analyzed in the Financial Stability Report. - An agreement between the NBM and the National Commission for Financial Markets is being drafted to establish general principles of cooperation, including information exchange. - Comment: The NBM could consider publishing the finalized agreement with the National Commission for Financial Markets. ### Arrangements to restore or maintain financial stability ### Legal and regulatory basis - Law on the National Committee for Financial Stability (NCFS) No.209/2018. - Regulation on Emergency Liquidity Assistance, approved by Decision of the NBM Executive Board No. 343/2019. ### Regulation on Emergency Liquidity Assistance — scope and provisions - Establishes principles, conditions, and method of providing emergency liquidity assistance by the NBM to licensed banks. - Specifies categories of financial assets accepted by the NBM as collateral for emergency liquidity assistance. - Defines the method of setting up and execution of collateral. - Outlines measures to be taken by the NBM in case of non-compliance by the bank with repayment obligations and related interest. ### Disclosure practices - The NCFS Law provides basis for data and information sharing across the financial sector. - Policy measures are disclosed via press releases and published in the Financial Stability Report. - The agreement between the NBM and the National Commission for Financial Markets is under drafting and could be published when finalized. ### Relations with foreign agencies and international cooperation ### Legal basis and reporting - Article 7 of the NBM law sets the basis for international relations; disclosures appear in NBM Annual Reports, Chapter 8: International relations. - Annual reports disclose relationships for exchange of information and coordination with international organizations, foreign governments, other central banks, and relevant foreign agencies. ### Modes and examples of cooperation and disclosure - NBM cooperation disclosed on its website, based on signed MOUs or spontaneous/reciprocity collaboration. - Examples of counterparts with MOUs: Central Bank of Lithuania, European Central Bank, Central Bank of Hungary, European Banking Authority, Turkey Central Bank, US Treasury Department, National Bank of Romania, Georgia Central Bank. - Press releases and public events (including video on NBM YouTube) used to inform public about signings and cooperation; example: live broadcasting of MOU signing with Central Bank of Lithuania on March 21, 2023. - NBM discloses relationships with international organizations and memberships in dedicated website sections titled International relations and European integration (examples: IMF, EBRD, IAIS, SBFN). - AML/CFT international cooperation activity is published annually in NBM Annual Report; cooperation arrangements available in MONEYVAL Reports. ### Specific cooperation examples and confidentiality - Bilateral Advisory and Investment Management Agreement with IBRD dated December 8, 2010, extended December 30, 2015 — IBRD manages a portion (limited to 20 percent) of NBM's international reserves under the agreement; confidential provisions not fully disclosed but referenced in Financial Statements for the 2023 (page 56, 82) available in Romanian. - Bilateral 2020 agreement with EBRD to conduct foreign exchange swap operations — press release issued; agreement provisions not disclosed due to confidentiality. ### Review findings and suggested enhancements - Review: NBM clearly defines and discloses relationships, instruments used in interactions, and outcomes of relationships with foreign agencies; legal framework contains detailed cooperation terms. - Comment: NBM may consider publishing MOUs' content with foreign agencies subject to consent and may publish references to relevant publications on other websites. ### Other relations: investments, ownership, and disclosures ### Central Securities Depository (CSD) - NBM is majority shareholder of the Central Securities Depository (CSD) — a joint stock company — with 98,36 percent share in the shareholder structure. - CSD established under Law No. 1134/1997 on joint-stock companies and regulated by Law on the Central Securities Depository No. 234/2016. - NBM establishes, regulates, monitors, and supervises the CSD pursuant to Law No. 234/2016. ### Disclosure of holdings and materiality - NBM discloses CSD holdings and transactions in audited annual financial statements (consolidated and separate, notes: subsidiary, transactions with related parties). - Annual Report (Chapter 5) provides detailed description of CSD activities. - Review: Investment in the CSD constitutes 0.02 percent of the NBM’s total assets and is transparently disclosed in accordance with IFRS accounting standards. ### Annexes and stakeholder listings ### NBM units and senior management (selected) - Governor; Advisers to the Governor; Members of Executive Board; Members of the Supervisory Board; Department of legislation and international law; Department of Strategy, Organization and Human Resources; Department of Budget, Finance and Accounting; Financial Markets Department; Business Continuity Management, IT Oversight, and Information Security Division; Internal Audit Department; Compliance Division; Security and Administration Department; Department of International Relations and European Integration; Combating Money Laundering and Terrorist Financing Division; Department of Monetary Policy; Department of Banking Supervision; Department of Financial Stability; Department of Regulation and Authorization; Department of Infrastructure, Payments, and Supervision of Other Institutions; Banking Resolution Division; Communication and Financial Education Division; Department of Reporting and Statistics. ### External stakeholders (selected) - American Chamber of Commerce in Moldova; Association of Investors from Romania in the Republic of Moldova; Ministry of Finance; Economy, Budget, and Finance Parliamentary Committee; National Commission for Financial Markets; Moldova Banks Association; MAIB; Victoriabank S.A.; EU Commission in Republic of Moldova; European Business Association of Moldova; Academy of Economic Studies of Moldova; State University of Moldova; Members of the Media (LOGOS PRES, Bank & Finance Profit, Infomarket News Agency, Money Matters Channel); Think tanks (Expert Grup, IDIS “Viitorul”); GRAWE CARAT Asigurări S.A.; KPMG; Professional Association of Accountants and Auditors; USAID, Moldova. ### Quantitative analysis of NBM communication ### Dataset and scope - Mission collected more than 25 years of published texts by the NBM. - NBM communication dataset encompasses 892 documents, including 177 reports and 715 press releases. - Comparison corpora: Romania — 2,247 texts; Georgia — 5,757 texts. - Note: If same report is published in English and local language, analysis uses both and provides averages. ### Analytical framework - Multifaceted framework: lexical (readability metrics), syntactical (sentence structure complexity using dependency measures), and semantical analyses (topics, communication stance, audience targeting, policy sentiment). - Semantical classifier built using recent development of novel multilingual Large Language Models (LLM), similar to those like ChatGPT. ### Key lexical finding - Moldova's reports are becoming longer: word count of Moldova's inflation reports increased from approximately 220,000 to 320,000 words between 2019 and 2024. - Growth in size of Moldova's monetary policy decision documents from 2021 to 2022 attributed to change in press release structure; since 2022, Moldova adopted a more analytical format offering detailed insights into macroeconomic factors influencing policy rate decisions. *Source: 1mdaea2025001-print-pdf - 1. With the Deposit Guarantee Fund in the banking system (DGFBS).* ### 4. Even though Moldova’s reports are becoming harder to read over time, they are ### 4. Even though Moldova’s reports are becoming harder to read over time, they are ### Lexical readability (Wording complexity) - Readability is measured by the Flesch-Kincaid Grade score. - Moldova’s annual reports and financial stability reports have a Flesch-Kincaid Grade score significantly higher compared to Romania and Georgia (Figure 2). - Moldova’s inflation report is substantially easier to read than Romania’s despite comparable size. - Moldova’s monetary policy decisions have the lowest wording complexity among the three countries and have trended toward greater readability since 2021. - Long and complex documents can overwhelm readers, reducing comprehension and retention of key information. - Recommendation: Streamline content by focusing on essential information and adopting clear, concise language to enhance readability and ensure critical messages reach a wider audience effectively. ### Syntactical analysis (Sentence clarity) - Sentence clarity is measured by the sentence’s syntactic dependency depth (lower depth indicates simpler structures). - Moldova’s publications generally feature simpler syntactic structures than its peers, favoring clarity and accessibility for the general public. - On average, sentence clarity in Moldova’s publications is higher than its peers (Figure 3). - The sentence clarity of Moldova’s annual reports and financial stability report has remained stable over time. - Clarity in NBM monetary policy decisions has improved, a trend also observed in Romania’s corresponding publication. - Recommendation: Continue simplifying sentence structure to improve public understanding and engagement, especially among audiences without specialized financial knowledge. ### Semantical analysis (LLM-based classification and interpretation) - Methodology: A state-of-the-art methodology utilizing Large Language Models (LLMs) is employed to classify and interpret text in an automated manner. - LLMs extract semantic information enabling classification of topics, communication stances, audiences, and policy sentiment. - Findings: - The mix of topics in NBM’s traditional publications has remained essentially unchanged for over 25 years, with monetary policy being the most prevalent topic (Figure 4). - Sentences that discuss monetary policy account for more than 80 percent of all NBM communication. - Among peer central banks, NBM has the most focused communication in terms of topic distribution. - Financial stability is the second most discussed topic, receiving increased attention during the global financial crisis and the COVID-19 pandemic, alongside mentions of crisis management. - When including other country-specific press releases and reports, Moldova’s communication pattern does not change with respect to topics conveyed in traditional publications (Figure 5). Romania and Georgia become significantly more diverse in topic distribution when broader outlets are included. - Forward-lookingness: - The NBM monetary policy communication pattern changed after inflation-targeting (IT) framework adoption in 2010 (Figure 6). - Emphasis shifted from backward-looking interest rates and exchange rate statements to increased forward-looking guidance on inflation and interest rates after IT adoption. - Moldova remains the least forward-looking among peers, with a declining share in monetary policy decisions since 2014 (Figure 7). - Forward-looking content in inflation reports has risen but remains below peer levels. - Forward-looking score of financial stability reports has not improved since their 2019 debut. - Forward-looking statements in annual reports have gained traction since 2021. ### Audience and sentiment - NBM communication primarily targets the financial sector and takes a generally hawkish stance (Figure 8 and Figure 9). - The audience of Moldova's monetary policy decisions has broadened to include international stakeholders, the general public/households, and the government, at the expense of fewer sentences toward the business sector. - Hawkishness is most prevalent in monetary policy decisions, followed by inflation, annual, and financial stability reports. - Since IT adoption in 2010, hawkish statements in monetary policy decisions have incorporated risk-highlighting and confidence-building elements. ### Net policy stance and derived metrics - Net policy stance metric incorporates explicit signals (hawkish and dovish) and implicit signals (risk-highlighting and confidence-building). - Net policy stance formula (as given): (H+R) − (D+C) ------------- H+R+D+C in which H, D, R and C are the number of sentences classified as hawkish, dovish, risk-highlighting and confidence-building, respectively. - Findings: - NBM tone has become more hawkish and risk-highlighting over the years, with a significant increase from 2006 to 2014. - The most significant increase in this tone was toward the business sector. - On average, NBM is the most hawkish with regard to international stakeholders, signaling focus on external macroeconomic risks. - After the COVID-19 outbreak, hawkishness and risk-highlighting statements toward the general public/households and business sector increased substantially, while sentences to other audiences remained steady. - Related aggregated metrics presented: certain ratio, confidence index, hawkish-dovish balance, and net policy stance discriminated by audience (Figure 10). ### Key recommendations and implications - Streamline reports to focus on essential information and adopt clear, concise language to improve readability and message reach. - Continue simplifying sentence structures to enhance accessibility for non-specialist audiences. - Consider broadening topic coverage through specialized reports and press releases to enhance outreach and engagement, following peers’ practice of using multiple communication outlets for topic breadth. - Leverage automated, LLM-based, data-driven methodologies to continuously evaluate and benchmark communication practices, enhancing transparency and stakeholder engagement. *Source: IMF Staff construction.* --- _Source: https://www.imf.org/-/media/files/publications/cr/2025/english/1mdaea2025001-print-pdf.pdf_