Dumitru Taraburca presents a four-part series on how the modern financial system is gradually subjecting the real economy to its own logic. And this is, to say the least, an extremely intriguing perspective.
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Here’s a riddle for your Monday morning. Imagine a system in which:
– banks are doing just fine;
– the regulator is satisfied with the regulations;
– payment delinquencies are low;
– Bank profits are rising;
– Meanwhile, the real economy is slowly dying.
You would normally expect that points 1–4 and point 5 cannot coexist for long. The health of the banking sector and the health of the economy, as is commonly believed, are roughly the same thing, just measured by different metrics.
I’m afraid I have to tell you some bad news: that’s not the case. It is possible to build a financial system that is in perfect health precisely at the moment when everything outside its balance sheet begins to fall apart. And it seems that this is exactly what is happening in Moldova right now.
But let’s start from the beginning, because that’s always more interesting.
What does a financial system actually do?
Back in the day—let’s not specify exactly when “back in the day” was; let’s just call it the era before everything got complicated—the financial sector was a boring middleman. Some people had spare cash, while others had ideas for a factory, a farm, or a road. The bank brought the two groups together, took its small commission, and went home. Boring, but straightforward: who owes what to whom, and why.
Today, things are a little different. The financial sector no longer simply connects people with money. It decides who is even entitled to an economic future. Who gets a loan. Which assets are considered liquid (that is, real). How much everything is worth. Who will retain ownership if debt arises, and who will seize that property if the debt goes unpaid.
Officially, this is called “risk management.” If you’re a cynical person (and you, reading this article, are surely a bit cynical), you might call it something else: managing access to the future. Someone decides not “how much money is worth,” but “who is even allowed to participate in the economy.” That’s quite a bit of power for an industry that, formally speaking, is supposed to simply shift numbers from one column to another.
There are more claims than there is reality—and this is a mathematically inevitable problem.
Here’s a fact worth keeping in mind: the global financial system produces far more financial claims —loans, bonds, derivatives, fund shares—than there are real assets that these claims supposedly represent. This isn’t a conspiracy; it’s simply the nature of modern financial engineering: you take one house and wrap twenty layers of paper around it.
The IMF confirms it: non-bank financial institutions—funds, private lenders, insurance companies, anything that isn’t a traditional bank with a stamp and a sign—now control about half of the world’s financial assets.
The problem is that many of them have high debt burdens, weak oversight, and very close ties to traditional banks. In other words, if something goes wrong not at a bank but at a neighboring investment fund, the bank will find out about it anyway—just a single phone call too late.
How bad could things get? In its 2025 Global Financial Stability Report, the IMF ran a stress test and found that problems in the non-banking sector could significantly erode the capital of approximately 10% of U.S. banks and 30% of European banks (based on total assets). This doesn’t mean “banks will go bankrupt.” It means “banks will sense that something is burning nearby.”
Next up is another favorite trope of modern macroeconomics: a figure that looks good until you dig into it and see what’s inside. In 2025, global foreign direct investment formally rose to $1.6 trillion. Great, you might say—investment is growing, factories are being built.
Not quite. More than $140 billion of this increase consists simply of transit flows through international financial centers. Money that enters a jurisdiction, makes a stop there, and then moves on. At the same time, the number of new projects has declined, project financing has continued to fall, and more than 80% of all global direct investment is concentrated in just twenty countries.
The bottom line: there’s plenty of money in the system. But there are far fewer mechanisms that force it to turn into a factory rather than just another layer of paperwork surrounding an existing factory.
Why the Next Crisis Will Unfold Differently Than the One in 2008
In 2008, everything was pretty old-fashioned: subprime mortgages, undercapitalized banks, banks collapsing, everyone panicking. Since then, regulators have done an excellent job on one thing: banks are now well protected. They have capital, reserves, collateral, and a direct line to the central bank.
The problem is that no one has learned how to protect borrowers. Businesses and households have no reserves, no access to emergency liquidity, and no benevolent central bank on the other end of the line. This means that the next crisis will most likely not look like “banks collapsing en masse,” but rather like “bank customers becoming insolvent en masse, while banks continue to report excellent performance.” The system has been taught to save itself. The economy surrounding it—not so much.
The mechanism works something like this, step by step:
– Expensive energy, imported inflation, and high-cost credit reduce the incomes of businesses and households.
– People and companies continue to borrow—simply to maintain their previous standard of living or bridge the cash flow gap.
– Credit quality looks excellent for a while because old debt is paid off with new debt. (If this reminds you of a pyramid scheme—it’s not just your imagination; on a macro scale, it’s called “refinancing.”)
– Real estate and other collateral continue to be valued at their old, high prices because lowering the valuation would immediately hurt the banks’ financial metrics, and nobody wants that.
– There comes a point when income is no longer sufficient even to refinance.
– The number of transactions is falling—but prices are holding steady for now.
– Banks restrict lending, foreclosures begin, and the liquidity crisis turns into a property crisis.
Notice where, in this chain, the bank actually suffers. Nowhere. It simply shifts its position step by step—first as a creditor, then as the owner of the collateral.
Moldova: A Case Study for Those Who Like Specifics
Now let’s move from general observations to the facts, because at some point we do need to cite specific figures.
As of March 31, 2026, the assets of Moldova’s banking sector reached 196.8 billion lei. Bank profits for the first quarter alone totaled 1.16 billion lei, an 11.3% increase from the previous year. Excellent figures! The question is: where exactly is this money flowing, and what—and whom—are the banks lending to?
The answer isn’t particularly inspiring:
– mortgages and real estate construction—27.4 billion lei;
– consumer lending—nearly 20 billion lei;
Together, this accounts for more than 43% of the banks’ total loan portfolio.
Retail trade accounts for another 22.6 billion lei.
In other words, the bulk of lending revolves around the purchase of apartments, consumer spending, and the resale of imported goods—not around the development of an industrial base. This isn’t an accusation—it’s simply where the money actually goes, if you look at the balance sheet rather than the press release.
There it is, the Moldovan paradox, in a single sentence: the banking system appears healthiest precisely at the moment when the real economy loses its ability to sustain itself. The share of non-performing loans is just 4.3%. Capital and liquidity exceed regulatory requirements. Profits are growing.
All of this is true. But a low delinquency rate doesn’t prove that the loan has generated new income. It only proves that people are still paying—whether through their salaries, remittances from relatives abroad, the sale of property, a new loan, or simply cutting back on consumption.
Banking statistics don’t see this distinction—and aren’t required to—because that’s not their job.
And here’s one more detail that I personally like best about this story: 17.4% of bank assets are invested in government securities and NBM certificates. Another 14.1% is held directly at the National Bank.
This creates an almost perfect cycle: the public and businesses deposit money in banks → banks lend against consumption, real estate, and trade, or park the money in government securities → the government borrows that same money to cover the deficit and support demand.
Every link in the chain is technically legitimate. Every document is signed correctly. It’s just that, for some reason, no real productive capital is being added to this entire structure.
The “Golden Key” Organized Crime Group (this is not about specific individuals)
Let’s make one thing clear right away: the name doesn’t mean that there are six people sitting in an office somewhere, plotting how to take over a factory. We’re talking about an institutional model, not a conspiracy. It’s just that this model operates so seamlessly that, from the outside, it looks like a conspiracy—even if, formally, it consists of six independent institutions, each of which honestly performs its narrow function.
Here’s how it works: one issues a loan. The second sets the rules. A third evaluates the collateral. A fourth adjudicates disputes. A fifth conducts the insolvency proceedings. A sixth purchases the asset after the former owner has been completely bled dry.
Each has its own paperwork, its own procedure, and its own legal integrity. And the outcome is surprisingly consistent: the debt remains with the borrower, the liquid asset goes to whoever has access to money, and liability dissolves somewhere among the six institutions, so that there’s no one to hold accountable.
And here’s an interesting legal twist: a financial institution formally lacks the authority of a prosecutor. But in practice, its control over a company sometimes proves to be stronger.
The prosecutor’s office must prove a violation—a process that is time-consuming, costly, and requires formal procedures. A bank, on the other hand, need only reassess the risk, demand additional collateral, refuse to extend a credit line, or demand early repayment. And that’s it—the company can be driven into insolvency completely legally—without a single criminal case, without a single charge, simply through a “risk reassessment.”
If, at the same time, there is no independent appraisal of collateral, no effective court system, and no transparent bankruptcy procedure (and we’re talking about Moldova, after all), risk management effortlessly turns into a mechanism for redistributing property.
Moldova has already been through this once—with the theft of a billion from the banks—and seems to have drawn a conclusion that’s all too convenient: since they’ve vetted the banks’ shareholders, strengthened oversight, and brought reporting up to European standards, the problem is solved.
But the new crisis is more subtle than the previous one. The money will most likely not physically disappear from the vaults. What will disappear are businesses, land, production facilities, and the remnants of national capital. Meanwhile, banks may well maintain regulatory stability—simply because losses will be shifted onto borrowers, the state budget, and the value of collateral, rather than onto the bank itself.
The Time of Money (or: Why a Bank Is Sometimes More Frightening Than a Prosecutor)
A brief digression on everyday power, because it’s more interesting than macro statistics.
Imagine this: a daughter sends her mother $500 from the U.S. No real estate, no complex structuring—just ordinary family support. The recipient, however, spends half a day at the bank filling out paperwork and proving the source of the funds.
On what grounds does a private commercial organization turn an ordinary person into a suspect? Law No. 308/2017 and the NBM’s regulations formally grant banks such powers—as part of the fight against money laundering.
But this is precisely where an almost imperceptible shift in power has taken place: the state has transferred the function of preliminary suspicion to the banks without also transferring the responsibility of a state agency. A prosecutor has a procedure and grounds for action. A bank, on the other hand, relies solely on an “internal risk assessment”—and can block your access to your own money without any court order. And will anyone compensate you for the wasted day and the humiliation if the suspicion turns out to be groundless? No. Compliance is always right—even when it makes absolutely no sense.
At the same time—and this is where the irony reaches its peak—schemes worth billions have been passing through the very same system for years, a system with the exact same procedures, questionnaires, and risk specialists. It’s easy to vet the little guy: he’ll show up, wait his turn, and sign whatever they give him. It’s harder to vet big money—they usually have lawyers, a well-crafted cover story, and far less desire to stand in line.
Even more telling is the situation with a borrower who has already paid everything off. The loan is closed, the interest has been paid, and the financial obligation has been fully fulfilled. But for some reason, the property remains tied up in the mortgage, and the lender demands “compensation” equivalent to a couple more loans of the same size.
At this point, the financial system ceases to be concerned with recovering the money and simply begins to extract income from the very fact of someone else’s dependence. If the debt is repaid, the collateral must lose its security function. Otherwise, it is no longer a guarantee of obligation fulfillment, but a tool for retaining ownership itself. And then come years of court proceedings, expert evaluations, and attorney fees to prove the obvious: that the obligation has been fulfilled.
And there’s also the broader context, so we can’t let our guard down at all.
The World Bank expects that Moldova’s current account deficit in 2026 could reach 19.8% of GDP, and that public debt will approach 44% of GDP by 2028 (World Bank, Moldova Economic Update, May 2026). The country will continue to depend on concessional external financing, while weak governance, politicization, and corruption are explicitly identified as risks to investment and the absorption of European funds.
Practical conclusion: The domestic financial system will be propped up by external funds, but the conditions for receiving them will largely determine the country’s economic policy. Formally, these funds are provided “for development.” In reality, a significant portion of it flows back out—through imports, debt service, procurement, and the profits of financial intermediaries.
So what, exactly, is the risk?
It is not that there is a shortage of money. There may even be more money. The risk lies in the complete disappearance of the link between financing and the creation of real national assets.
If a loan does not generate additional productivity, export revenue, infrastructure, or a viable region—it does not finance development. It simply transforms the country’s future income into current profits for the financial sector.
It’s a rather dry accounting concept, if you think about it—but it’s precisely these dry accounting concepts that usually explain why countries grow poorer while their banks thrive.
Banking stability alone cannot stop such a crisis. What is needed is tracking the ultimate use of loans, limiting excessive financing of speculative demand, a truly independent assessment of collateral, public oversight of the sale of bank assets, protection of operating businesses in insolvency proceedings, and personal liability for driving a viable business into liquidation.
Here’s a sound principle that deserves to be nailed down somewhere: a financial institution should not derive more benefit from the destruction of a business than from its recovery.
For now, however, the system works the other way around. A bank is almost always protected by collateral. The regulator is protected by formal compliance with regulations. The bureaucrat is protected by procedure. The creditor is protected by contract. The administrator is protected by a court ruling.
The only one who isn’t protected is the very person who actually created that asset.
So “The Golden Key” is not the name of a specific criminal group, and it makes no sense to bring a case against it. It is the structure of an economy in which financial institutions hold the keys to all the doors, and behind those doors, there is gradually almost nothing left.
Dumitru Taraburca,
an expert in real estate appraisal and development
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