Remittances, Real Exchange Rate Appreciation and Monetary Policy in the Republic of Moldova Yerevan, Armenia 24 June 2010

Factors Underlying Compilation Methodology Counterpart statistics on remittances to Republic of Moldova not applicable No threshold on reporting data through the ITRS Accurate reporting of data by banks Other available data sources (specialized surveys)

National Bank of Moldova: Remittances Estimation Model ABROADMOLDOVA (1) Money transfers (2) FX cash transmission MTOs agents/ subagents. Electronic transfers Banks Bank transfers Commercial banks (act as MTOs agents) Remittances adjustments FX cash withdrawal Households Consumption In FX Real estate, cars markets Consumption in national currency Exchange offices Cash carried by migrant during home visits Cash transferred by train conductors, bus drivers, etc. Increase in FX deposits Net export of FX cash FX cash National currency equivalent Net buying of FX cash A B C D E

Remittances in the context of BOP Source: National Bank of Moldova, Balance of payments

Currency composition of the money transfers by natural persons Source: National Bank of Moldova

Main currencies nominal exchange rate evolution Source: National Bank of Moldova

Main currencies nominal exchange rate evolution (2) Source: National Bank of Moldova

Remittances vs. Quarterly Average Exchange Rate Source: National Bank of Moldova, Balance of payments

Gross remittances and trade deficit Source: National Bank of Moldova, Balance of payments

Remittances vis-à-vis other inflows Source: National Bank of Moldova, Balance of payments

Conclusions Migration and remittances are country specific issues, depend on many factors such as geographical location, legal regulation of cross-border movement in host countries, language barriers, education level of migrants, etc. That is why countries should take into consideration their own specifics while elaborating estimation methods. As the factors that influenced migration and remittances are changeable the methods of their estimation can not be permanent. They need periodical revisions. Even if the data sources used for estimations seem to be reliable, use of additional data sources for the validation of assumptions is necessary

Monetary Policy for 2010 NBM monetary policy strategy has a medium-term focus, to achieve and maintain price stability. Monetary policy for 2010, main objective: inflation objective* percent (± 1.0 percentage points) As compared to:  9.0 percent by the end of the year – for 2009  10.0 percent by the end of the year – for 2008 *measured by the consumer price index published monthly by the National Bureau of Statistics (NBS)

Monetary Policy instruments Main monetary policy instrument:  open market operations Auxiliary instruments  standing facilities,  required reserves ratio and  foreign exchange market interventions

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