Republic of Moldova: Technical Assistance Report—Design Considerations for a New Bank Liquidation Framework
Technical Assistance Reports, July 12, 2024
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Bibliographic details
- Published: July 12, 2024
- Series: Technical Assistance Reports
- DOI: https://doi.org/10.5089/9798400282096.019
Mission overview and context
- At the request of the National Bank of Moldova (NBM), a technical assistance (TA) mission of the Monetary and Capital Markets Department and the Legal Department visited Chisinau during November 28 to December 5, 2022, to assist with the design of a revised bank liquidation framework.
- Publication date: July 12, 2024.
- Pages: 30.
- Series: Technical Assistance Report No. 2024/055.
- DOI: https://doi.org/10.5089/9798400282096.019
- ISBN: 9798400282096
Stylized liquidation models reviewed
- Purely administrative model
- A public authority (e.g., the resolution authority) directs the liquidation procedure.
- Judicial model
- Relies on court-supervised liquidation procedures.
- Hybrid model
- A dedicated liquidator carries out the liquidation process under supervision of the court.
Key findings and considerations
- The mission identified important considerations in support of a continued (albeit reduced) role for the NBM in bank liquidation.
- A hybrid model could be a viable option for Moldova:
- By shifting more responsibilities to the judiciary, the NBM’s Resolution Division could free up some resources.
- The hybrid model would maintain synergies between the NBM’s responsibilities for adopting early intervention measures and (the planning of) bank liquidation.
Recommended NBM powers under a hybrid model
- The mission recommended that, in such a model, the NBM retains the power to:
- (i) initiate liquidation;
- (ii) appoint or propose liquidators; and
- (iii) undertake a ‘Purchase and Assumption’ type of transaction, whereby the deposits of the failing bank are transferred to a willing buyer.
Detailed guidance provided
- The mission provided detailed guidance on:
- (i) the triggers for determining when liquidation should be initiated;
- (ii) the process for commencing the liquidation process;
- (iii) the legislative design of transfer powers and associated safeguards;
- (iv) the role and appointment of liquidators; and
- (v) legal protection of the NBM.
Subject classification and keywords
- Subject: Bank liquidation, Bank resolution, Bank resolution framework, Banking crises, Financial crises, Financial sector policy and analysis, Financial sector stability
- Keywords: Bank Failures, Bank Liquidation, bank liquidation model, Bank resolution, Bank resolution framework, Banking crises, Depositors, Financial sector stability, Financial Stability., liquidation framework, Moldovan bank liquidation regime, NBM Law, NBM staff, Purchase and Assumption, Republic of Moldova
Republic of Moldova: Technical Assistance Report—Design Considerations for a New Bank Liquidation Framework (Technical Assistance Report No. 2024/055).