Accessibility options

×

Do you have good eyesight and want to turn this tool off?

  • Schedule of reception of citizens by the Executive Board of the National Bank of Moldova.
    The registration of applicants for an audience is carried out based on a written request on the subject addressed.


  • Anca Dragu, Governor

    1st Wednesday of the month: 14.00-16.00.


  • Petru Rotaru, First Deputy Governor

    2nd Wednesday of the month: 14.00-16.00.


  • Tatiana Ivanicichina, Deputy Governor

    3rd Wednesday of the month: 14.00-16.00.


  • Constantin Șchendra, Deputy Governor

    4th Wednesday of the month: 14.00-16.00.


  • Mihnea Constantinescu, Deputy Governor

    5th Wednesday of the month: 14.00-16.00.

Please, note the requirements for receiving and examining petitions and requests for access to information of public interest addressed to the National Bank of Moldova!

Details

 

You can choose one of the most popular reports from the list:

NBM Interactive Database

Main navigation BNM

  • Twitter logo
  • Facebook logo
  • LinkedIn logo
Expand Hide

The DSTI Gap: A Novel Risk Monitoring Tool and Reverse Stress-Test to Assess Borrower Resilience to Inflationary Shocks in European Economies

 

The DSTI Gap: A Novel Risk Monitoring Tool and Reverse Stress-Test to Assess Borrower Resilience to Inflationary Shocks in European Economies

Author: Alexandru Monahov, National bank of Moldova

 

Summary

This working paper introduces the DSTI Gap, a new risk monitoring tool designed to assess household ability to repay debt amidst inflationary pressures. Building on the Debt-Service-to-Income (DSTI) ratio, the DSTI Gap measures the excess financial resources borrowers have after covering expenses and debt payments – essentially their buffer against shocks.

Analyzing the data for 15 European economies which adopted the DSTI ratio, the research develops an instrument which can be used to dynamically track the distance-to-default of borrowers under different types of shocks: inflationary, revenue and policy changes.

Furthermore, coupled with reverse stress testing, the DSTI Gap can determine the maximum inflationary shock a borrower can withstand before defaulting.

Analysis of the situation in Moldova reveals that a 40% DSTI threshold provides adequate protection against moderate inflation, but higher or sustained price increases may necessitate adjustments to this limit for borrowers to remain solvent.

Key findings highlight:

  • The DSTI Gap offers a quantitative framework for regulators to calibrate appropriate DSTI thresholds based on actual living standards and income levels.
  • It allows for proactive assessment of the sustainability of existing or proposed DSTI limits in changing macroeconomic conditions, particularly regarding inflation.
  • By linking regulatory caps to essential consumption costs, the DSTI Gap moves beyond a simple percentage-based approach towards a more calibrated and borrower-centric model.

This tool provides valuable insight for financial stability monitoring and policy calibration, helping ensure borrowers remain solvent during periods of economic volatility.

 

Subscribe to Newsletter
CAPTCHA
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.
See also
Tags

1 Grigore Vieru Avenue,
MD-2005, Chisinau, Republic of Moldova.

Contacts.

© National Bank of Moldova
Terms of use
Cookie Usage Policy