Tbilisi, Georgia June, 2009

Conference on “The Modern Role of Central Bank

in Small Open Economies”

Monetary Policy Monetary Policy

of National Bank of Moldovaof National Bank of Moldova::

objectives, achievements and challenges

National Bank of Moldova –

central bank of Republic of Moldova – autonomous public legal entity responsible to the Parliament

1. The primary objective of the National Bank is to achieve and maintain price stability. Without prejudice to the primary objective, the National Bank shall foster and maintain a stable market-based financial system and support the general economic policy of the State.

2. Administrative Council of the National Bank of Moldova is composed of five members: Governor, First Vice-Governor and three Vice-Governors.

3. Members of Administrative Council are appointed by the Parliament fo the Republic of Moldova for 7 (seven) years.

Legal Framework

44.0%

18.4%

6.3%

4.4%

15.7%12.5%

10.0%

14.1%

13.1%7.3%

-1.6%-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 may2009

Inflation CPI last 12 months

Monetary Policy Instruments used in 2008 - 2009

Monetary Policy Instruments in the first stage

• Increase of the base rate from 13.5% up to 18.5%.

• Increase of the reserve requirements ratio applied both to the attracted funds in local and foreign currencies from 15.0% up to 22.0%.

Monetary Policy Instruments in the second stage

• Decrease of the base rate from 18.5% up to 10.0%.

• Decrease of the reserve requirements ratio applied both to the attracted funds in local and foreign currencies from 22% up to 17.5%.

-1.6

7.3

16.9 10.014.0

17.519.022.0

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

Jan

20

08

Feb

20

08

Ma

r 2

00

8

Ap

r 20

08

Ma

y 2

008

Ju

n 2

00

8

Ju

l 2

00

8

Au

g 2

00

8

Sep

t 2

00

8

Oct

200

8

No

v 2

008

Dec

20

08

Jan

20

09

Feb

20

09

Ma

r 2

00

9

Ap

r 20

09

Ma

y 2

009

% CPI Base rate Required reserves

Inflation, Base rate, Required reserves

Monetary aggregates

-13.5%

-15.1%

-4.1%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

2003 2004 2005 2006 2007 2008 May 2009

Currency in circulation Broad money(M2)Broad money (M3)

Deposits y-o-y (%)

16.6

46.8

-2.9

21.0

65.3

-17.9

10.7

26.718.6

-20

0

20

40

60

80

jan

.08

feb

.08

ma

r.0

8

ap

r.0

8

ma

y.0

8

jun

.08

jul.

08

au

g.0

8

sep

.08

oct

.08

no

v.0

8

dec

.08

jan

.09

feb

.09

ma

r.0

8

ap

r.0

8

ma

y.0

8

Deposits Total Deposits MDL Deposits USD

Deposits structure (%)

60.1

49.8

58.9

39.9

50.2

41.1

30

40

50

60

70

jan

.08

feb

.08

ma

r.0

8

ap

r.0

8

ma

y.0

8

jun

.08

jul.

08

au

g.0

8

sep

.08

oct

.08

no

v.0

8

dec

.08

jan

.09

feb

.09

ma

r.0

8

ap

r.0

8

ma

y.0

8

Deposits MDL Deposits USD

Credits y-o-y (%)

20.3

55.2

3.5

25.640.4

1.7

13.5

79.5

6.0

-20

0

20

40

60

80

100

jan

.08

feb

.08

ma

r.0

8

ap

r.0

8

ma

y.0

8

jun

.08

jul.

08

au

g.0

8

sep

.08

oct

.08

no

v.0

8

dec

.08

jan

.09

feb

.09

ma

r.0

8

ap

r.0

8

ma

y.0

8

Credits Total Credits MDL Credits USD

Foreign Exchange Reserves

1169.61102.0

1672.4

0

200

400

600

800

1000

1200

1400

1600

1800

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

jan.

09

feb.

09

mar

.09

aprl.

09

may

.09

mill

ion

USD

0

0.5

1

1.5

2

2.5

3

3.5

4

mon

ths

Import covered by foreign exchange reserves (months) Foreign Exchange Reserves

Exchange Rate

11.5

17.0

15.2

11.211.311.0

10.710.510.4

11.3

12.912.8

12.5

13.213.8

13.113.5

14.4

16.5 16.617.0

14.7 15.6

15.0

14.413.6

10.0

12.0

14.0

16.0

18.0

2001 2002 2003 2004 2005 2006 2007 2008 jan.09 feb.09 mar.09 aprl.09 may.09

MDL

USD Euro

Inflows and outflows 2009(accrual, against 2008, %)

-50.0

-45.0

-40.0

-35.0

-30.0

-25.0

-20.0

-15.0

Jan Feb Mar Apr May

Export Import Remitances Balance

Inflow and outflow balancemil. USD

-120.0

-100.0

-80.0

-60.0

-40.0

-20.0

0.0

Jan Feb Mar Apr May

2007 2008 2009

Interest rates (MDL)

-1.6

7.3

21.321.0

15.118.1

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

2001 2002 2003 2004 2005 2006 2007 2008 jan.09 feb.09 mar.09 aprl.09 may.09

% CPI (12 month) Credits Deposits

Interest rates (foreign currency)

13.2

12.0

9.79.6

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

2001 2002 2003 2004 2005 2006 2007 2008 jan.09 feb.09 mar.09 aprl.09 may.09

%

Credits ($) Deposits ($)

Objectives for 2009

The monetary and F/X policy for 2009 is aimed at ensuring and maintaining price stability at a level up of 9.0% ±1.0% based on the following

principles: – maintaining the NBM base rate positive in real terms;

– setting up the reserve requirements ratio at a level consistent with the rate of inflation, inflation expectations, economic environment and money market conditions;

– enhancement of the monetary policy instruments to promote efficient open money market operations;

– monetization of the economy will be adequate to ensure the forecasted economic growth;

– maintaining a floating exchange rate regime.

Thank You

for Your Attention!

7 Renaşterii Ave., Chişinău, Republic of Moldova MD-2006

Tel. (3732) 221 403,

fax (3732) 212 050,

www.bnm.md