Alignment with Basel IV Standards – a Key Pillar in the Process of the Republic of Moldova's Accession to the European Union

Abstract

Under the rigorous supervision of the National Bank of Moldova (NBM), banking regulations focus on institutional resilience, consumer protection, and mitigating systemic risks. The evolution from Basel I (credit risk focus) to Basel III (capital quality and liquidity) represents a shift toward risk-based, macroprudential, and qualitative supervision. Central to this framework is the Capital Adequacy Ratio, which acts as a "safety net." By weighting assets by risk (RWA), the ratio ensures banks hold sufficient own funds to remain solvent and protect depositors, while acting as a "prudential lever" to prevent over-indebtedness and uncontrolled credit expansion. The transition toward Basel IV (the finalization of Basel III) is the definitive step for Moldova to achieve European equivalence. Basel IV introduces the Output Floor, limiting the use of internal models to "beautify" risk indicators. It mandates that internal RWA calculations must not fall below 72.5% of the standard model, ensuring transparency and global comparability. Key changes include revised credit and operational risk assessments, which improve accuracy but may pressure profitability (ROE). CZU: 336.71(478):061.1EU; JEL: F360