The team of the EU-funded “Project Preparation Facility” contributes to the improvement of the Moldovan Government Securities market

The development of the Moldovan government securities market was the subject of a meeting held at the National Bank of Moldova in July 2023, with the participation of representatives of the Ministry of Finance and the EU-funded technical assistance project “Project Preparation Facility” (PPF Project).

During the meeting, PPF Project expert Constantinos Kyriakopoulos presented methods to enhance the Moldovan government securities market architecture, aiming to facilitate easier access for both international and domestic investors. Various options and mechanisms for government securities placement were explored, including the possibility of issuing securities denominated in both domestic and foreign currencies. It was highlighted that given the current conditions, characterized by a high level of liquidity and foreign currency supply in the domestic market, issuing G-Sec in foreign currency could potentially exert additional pressure on financial stability. As an alternative, the option of issuing bonds in Moldovan lei on international markets was also under consideration.

Another topic of discussion was the possibility of establishing connections between the Single Central Depository (SCD) and international central depositories, such as Euroclear and Clearstream, as well as bilateral connections with national depositories in other countries. Both Euroclear and Clearstream allow access to the most developed capital markets in the world, at the same time, connections with these institutions depend largely on the volume and attractiveness of financial instruments of the Republic of Moldova.

The architecture of the primary and secondary government securities market was also analysed, including the role of primary dealers, G-Sec trading platforms and the Single Central Depository. It was noted that as of 2023, G-Sec with a maturity of more than one year could be admitted to trading on the stock exchange, i.e., transactions in government securities may be carried out through both primary dealer banks and non-bank brokers. In this context, the PPF Project experts proposed to examine the possibility of participation of non-bank brokers in auctions of G-Sec alongside primary dealers.

NBM Governor Octavian Armașu, who attended the meeting, commended the initiative of the Ministry of Finance and of the PPF project experts. Mr. Armașu highlighted the NBM’s efforts to stabilise the domestic financial market and establish a solid technical infrastructure, which are crucial for attracting foreign investors. Governor Armașu proposed forming a Task Force Team comprising relevant institution representatives to oversee and execute this ambitious project.