The year 2018 began with good news for depositors. This is the amendment to the Deposit Guarantee Act, which stipulates the increase of the ceiling from 6 thousand lei to 20 thousand lei. Prior to amending the law, the deposit guarantee fund was about 339 million lei equivalent to 12% of the total deposits guaranteed to individuals. However, the volume of the fund relative to the total balance of deposits in the banking system is below 1%. This is the opinion expressed by the IDIS Viitorul economist, Ion Tornea, during the 15 minutes of economic realism show.

At the current level, even with the deposit guarantee ceiling of 20,000 lei, it is not enough to return the deposits of individuals in the three largest banks in the Republic of Moldova (Agroindbank, Moldindconbank, and Victoriabank) because the concentration rate of deposits is very high. Over 65% of total savings are in the three banks. We have the example of bankruptcy in 2015 of the three devalued banks when the fund was not enough and there was a need for state loans.

Ion Tornea argues that the increase in the deposit guarantee ceiling does not contribute to increasing confidence in the Moldovan banking system and stimulating economies, given that long-term resources are needed by the economy. Moreover, the Deposit Guarantee Fund is not the pillar that would annihilate the image crisis in which the banks have been mentioned after the theft of the bill. The evidence is that the population places their savings in the short term.

According to the economist, because of the fear of placing long-term money in banks for many years, the opportunity to channel migrants' money into the productive sectors of the economy (business start-up) is missed. In the absence of the alternative, money reaches consumption, real estate or other unproductive sectors.

Another shortcoming in the safety of deposits is the authorities' intention to create a bank resolution fund at 3% of the deposit guarantee fund. "It is insufficient and will not be able to cover the savings of individuals even from medium size banks. The resolution fund will take money from the loans and again the citizens will bear the consequences of bankruptcy in the banking system".

In conclusion, Ion Tornea affirms that after the signing of the Association Agreement, the Republic of Moldova has committed itself to harmonize its legislation with the acquis communautaire aimed at guaranteeing deposits in the banking system. Thus, according to European directives, Chisinau should increase the deposit guarantee fund by at least 12 thousand euros annually. But this is not the case, and the more time authorities spend the longer the funds and the pressure on the banking system will be bigger.

The show is made by IDIS "Viitorul" in partnership with Radio Free Europe.

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