One of the main parliamentary bills of this fall is a document establishing guarantees for the return of bank deposits in case of default, says the general adviser of the mixed parliamentary group SDP, Victor Naudi Zamora

Throughout the autumn, the Andorran parliament will continue to consider draft laws related to the regulation of the financial and banking activities of the principality. The purpose of the laws is to fulfill the requirements arising from the Monetary Agreement signed in 2010 between Andorra and the European Union.

These requirements should be explained to banks and executed in accordance with common European standards. Among the legislative initiatives is also a bill related to the regulation of the rental market. General counsel of the mixed parliamentary group SDP, Victor Naudi Zamora, told what exactly the legislative committees will discuss:

“One of the main bills is a document that establishes guarantees for the return of bank deposits in case of default. As you probably know, after the scandal with the Banca Privada d’Andorra (BPA), customers had a lot of problems with obtaining compensation. Under the new legislation, banks in the event of default will be obliged to return the money – the maximum guaranteed amount of payments is set at 100 000 euros. This requirement will affect all financial structures and insurance companies. The existing law guarantees the payment of 20,000 euros. This amount should be increased, as I mentioned above, to 100 000 euros – these are the requirements of the EU.

In other words, the objective of the law is to apply the international requirements. To some extent, this law is a supplement to the existing legislative norms arising from the Monetary Agreement. It is adapted to European standards, but at the same time it is a compromise for integration into the international banking system and ensuring the stability of banks. Such a law is necessary so that Andorran banks can make international transactions with European countries, as well as with the United States.

Work in the legislative committee should be completed by November 19, 2018, and will then be put to vote in the plenary.

Among the bills that will be discussed in the near future there is also a law on financial conglomerates – it will regulate the activities of banking associations also in accordance with international standards.

We will also discuss changes in the sphere of payment services and circulation of electronic money. In addition, the bill submitted by the Andorran liberal party, regarding the norms of transparency of access to information, will be considered.

I would also like to comment on the bill introduced by the Andorran government, whose aim is to promote the development of the rental market. The government’s initiative is aimed at solving the problem with the lack of rental housing in Andorra, and also try to limit the rising of rental prices that has been taking place in the Andorran market in recent months.

The bill should encourage the owners of empty apartments to rent their properties on a long-term lease. We are talking about apartments built before the economic crisis. The government intends to impose a tax of 5 euros per square meter on apartments that are “idle”. However, this measure, in my opinion, can have the opposite effect – it will not contribute to the construction of new residential premises for their subsequent leasing.

On the other hand, the bill requires some correction of errors caused by the law, which regulates the leasing of so-called “tourist apartments”. The latter law has become one of the reasons for the reduction in the number of dwellings leased for a long period of time. Most owners of such housing prefer to rent it to tourists, which is much more profitable. This fact has led to the extorted prices in the rental market.

Another important issue on the agenda is the popularization of mortgage lending in Andorra. At present, banks are very reluctant to issue them. Among the reasons are strict international requirements on the movement of capital (namely, the legality of its origin). We have to find mechanisms for solving this problem.”

Andrew Winer

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