Banking Supervision May Change Hands
29 May, 2015
Banking Supervision May Change Hands
Georgian Parliament recently suggested transferring the capacity of banking supervision from the National Bank of Georgia to a new public law entity called the Financial Supervision Agency. Proponents of this idea believe it is going to provide the banking sector with proper regulation – something that is severely sub-par at the moment. Opponents claim that this separation will weaken the NBG and violate banking secrecy.

A new, separate regulatory body, Financial Supervision Agency is expected to replace the National Bank’s financial
supervision committee. The FSA is expected to become operational as of July 1, 2015.

Tamaz Mechiauri, Deputy Head of the Finance and Budget Committee at Parliament, was the one who submitted the bill in question. The amendment to the law is aimed at replacing the National Bank’s financial supervision committee with a separate regulatory body named Financial Supervision Agency. The FSA is expected to become operational as of July 1, 2015. However, as Finance Minister Nodar Khaduri claims, despite being under NBG control, the FSA will be completely independent and answer only to the Parliament. It will be led by a council of seven members, each appointed for seven years. One of the members will be Governor of the NBG, but he/she will not be able to chair the council. The Parliament will nominate all other council members and they, in turn, will elect the chairman.
NBG and FSA will be oriented towards enhancing transparency of the Georgian financial sector as well as protecting the rights of consumers and investors alike. The scope of FSA activity duplicates the currently active financial supervision committee of the NBG and covers the following parts of the financial sector: commercial banks, non-banking deposit institutes, qualified credit institutes, micro-finance organizations, money transfer and currency exchange activity as well as the securities market.
According to Mr. Mechiauri, the reasoning behind the bill he proposed was to weaken the universal control of the NBG. The point is that the recent depreciation of Georgian national currency has unleashed a wide range of speculations about the depreciation being mostly caused by commercial banks rigging the currency market rather than by economic factors. And yet despite the abundance of such claims, the NBG has turned a blind eye.
A year earlier, the Financial Monitoring Service was separated from the NBG as an independent body responsible to the prime minister alone. According to Roman Gotsiridze, ex-governor of the NBG, removing the banking supervision capacity as well will ruin the bank. He considers this to be an attempt to control not only the commercial banks, but also the entire business community.
“This bill revokes the confidentiality of banking information and any tax body will be able to see our accounts. Previously, something like this could be authorized only by a court decision. This step abolishes the NBG as such, leaving it only a technical function,” Gotsiridze says.
The Association of Young Businessmen and Financiers approves of the initiative, though. According to Shota Gulbani, Vice President of AYBF, separation of the FSA from the NBG will enhance the transparency of the banking sector and will leave no room for speculations.
“The NBG and the government are playing a blame-game at the time of the currency crisis. To avoid such misunderstandings and insinuations in the future, Parliament has decided to assume the responsibility of staffing the council,” he said.
Irakli Dogonadze, Executive Director of the Center for Analysis and Prognosis at Tbilisi State University, thinks that FSA separation is viable as a temporary remedy to discharge the currency crisis, since the National Bank’s monetary policy poised and still poises many question marks. However, in the long-term, he recommends making the NBG a universal and strong regulatory body for the entire financial system.
Other Stories
Doing business in Georgia has become easier than in America
According to the Doing Business 2019 report published by the World Bank, Georgia ranked 6th among 190 countries in terms of simplicity of doing business. This was an improvement over two ranks compared to last year.
Problems that foreigners frequently face in Georgia
The importance of Georgia as a tourism hub is growing year after year.
Tbilisi TV Broadcasting Tower – Better than the Eiffel Tower?
It is planned to renovate the Tbilisi TV Broadcasting Tower, one of the landmarks in the capital.
Georgian Fusion Menu by The Biltmore Hotel Tbilisi
5,895,914 international visitors have visited Georgia between January and August of 2018. Compared to the previous year the number has increased by 12.2 per cent.
Advertising of gambling and lucrative games may become banned in Georgia
Advertising of gambling and lucrative games may become banned in Georgia. Those who violate the new rule would be fined GEL 10 000.
Lebanese café-lounge Beirut opens in Tbilisi
What is necessary to organize an unforgettable event? – Fun, emotions, lots of surprises, good music and delicious menu.
Georgia second among the fastest growing tourist destinations in Europe
Georgia is among the fastest growing tourist destinations in Europe. The data is published by the UN World Tourism Organization.
Bitmain launches world digital mining summit in Tbilisi, Georgia
Bitmain CEO Jihan Wu and Roger Ver, CEO of Head Speaker List featuring Circle, and Genesis Mining when Digital Mining Leaders Convene In Tbilisi on September 21-23
TBC Bank and Gazelle Finance have teamed-up to support Medical City, a leading healthcare provider in the western region of Georgia to launch the Western Regional Center Of Modern Medical Technologies.
Equivalent to buried treasure – resources that are underused in Georgia
For 2018 the IMF Commission has forecast an annual economic growth for the Georgian economy of about 5,5%.
Does the quality of Georgian wine increase and how the export affects it
If we look at the data collected about modern Georgian wine, we will find out that the Georgian wines produced between 2015-2017 are much better in terms of their quality and Oenologic features rather than the wines produced between 2009-2011.
Japan simplifies the visa requirements for Georgian citizens
Diplomatic and economic relations between Georgia and Japan are now moving to a new phase. Recently Japan has decided to simplify the visa requirements for Georgian citizens.
M&S (Marks and Spencer) and H&M collections to be produced in Georgia
Garments manufacturer MGMTEX will start production of the M&S and H&M trendy collections from this September.
The World Digital Mining Summit to be held in Georgia
The summit is scheduled to take place between 21st-23rd September in the Hualing Hotel, Tbilisi, Georgia.
Galt and Taggart - Tourism Boom Continues in Georgia
Tourism has become one of the key drivers for the Georgian economy. Galt and Taggart has recently published research about the Georgian tourism sector in the first half of 2018.
"The worst dream for Putin is that Russians want to live in Georgia"
This year, visitors to the Adjara region would notice that there is a boom in construction in and around Batumi.
Underground gas storage facility to be built in Georgia
KfW, a German government-owned development bank signed a EUR 150 million promotional loan with the state-owned Georgian Oil and Gas Corporation (GOGC) for the construction of the first underground gas storage facility in Georgia.
New gambling rules for Georgia
Georgian lawmakers are preparing a new draft law relating to online-casinos and gambling that will seek to curb gambling addiction in Georgia.
How expensive is it to visit Georgia?
The Georgian Lari (GEL) is the official currency of Georgia and is the only legal means of payment in the entire territory of Georgia.
Trade with the EU and the Commonwealth of Independent States (CIS) has grown significantly
Trade with the EU and the CIS has grown by 26% and 33.5 % respectively, says GeoStat, the Georgian National Statistics Office.
The unemployment rate decreases in Georgia
The unemployment rate decreased in Georgia by 1,9% and amounted to 12.1% in the 2nd quarter of 2018 compared with the previous quarter,
Memorandum of Understanding to be signed between Georgia and Malaysia
According to the Georgian Ambassador to Malaysia Nikoloz Apkhazava, Georgia plans to sign a Memorandum of Understanding (MoU) with Malaysia.
“Blauenstein Georgia” due to expand in Georgia
“Blauenstein Georgia” is planning to open more shops in Georgia. It is an agriculture company that sells meat products, meat and convenience food.
The amount of Direct Foreign Investment rises in Georgia
According to the information of the National Statistics Office of Georgia, the amount of direct foreign investment in Georgia has risen
It’s going to get  harder for foreigners to get residence permit in Georgia
It’s going to get harder for foreigners to get permit of residence in Georgia.
Exchange Rates
GEL Exchange Rate
Other Stories
Recently Toyota rolled out Global Campaign under this slogan that reflects the Olympic and Paralympic Spirit of Encouragement,
A couple from Switzerland combines Swiss tradition and technology with Georgian products. Their cheese is made in the Georgian mountains and sold in local stores and hotels.
It has been more than five years since the residents of Lilo village, near Tbilisi, cannot open their windows.
63 000 GEL was received by the Georgian Agro Export Group which is just a small part of the European Neighbourhood Programme for Agricultural and Rural development.
Georgian entrepreneur Guka Tavberidze, who runs his own business in the UK and does it quite well, has been invited by BBC
The grand opening of 7-star The Biltmore Hotel Tbilisi took place in Georgia’s capital on July 31.
DUSHETI, Georgia – The Georgian government and the World Bank will allocate USD 5.6 million (12 million GEL) to fund
A new Georgian clothing brand named Person has emerged in Georgian market.
Georgia is in the midst of an economic maelstrom, Euronews reports.
Situation at Georgia’s mineral water market is interesting: over the last year, the volume of export has grown by 56 percent. According to “GeoStat”, over $114 million worth of mineral water was sold
GEL Exchange
November 2018
Mon Tue Wed Thu Fri Sat Sun
1 2 3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28 29 30