Drafting the legislation regarding the guarantee fund for the savings deposits in the savings and loan associations
Donor: National Commission for Financial Markets
Implementation period: October - December 2019
Main activities:
- Elaborating the draft law on the guarantee fund for the savings deposits in the savings and loan associations (credit union, the endorsement note and the impact analysis;
- Conducting an analysis of the Savings and Loan Associations (SLA) sector and drafting the economic model of the guarantee fund based on the best international practices, adapted to the peculiarities SLA sector from the Republic of Moldova;
- Analysis of the data collected from the SLA and calculating the coverage degree of members’ deposits, the size of the guarantee fund based on the guarantee ceiling, the volume of annual contributions and other parameters, based on the optimum scenario.
In order to ensure an objectively argued analysis, current existing data on the deposits and economic indicators for the Savings and Loan Associations were collected, with the purpose to draft the economic model that implies the analysis of several scenarios in the process of legislation drafting, thus, ensuring a coherent evaluation of the socio-economic impact both on the SLAs, the depositors, the sustainability and resilience of the Guarantee Fund, the timeline for accumulating the targeted funds and the potential financing need.
The economic assessment comprises the following aspects:
- economic justification of the ceiling and its impact on the depositors (based on international practice and the experience of the banking sector);
- establishing the minimum target value for accumulations to the fund as a share from the total guaranteed deposits;
- establishing the annual average contribution rate;
- applying the risk-based methodology;
- establishing the individual annual contribution;
Project impact:
The elaboration draft Law regarding the guarantee fund for the savings deposits in the Savings and Loan Associations is foreseen in the EU-MD Association Agreement and was drafted in compliance with the regulations and methodologies established by European and international authorities, with the needed level of adaptation to national realities. Implementing the law will ensure competitive equity and homogeneity of the services provided by the financial markets for all consumers.