Georgia : Financial Sector Assessment Update

Abstract

The Financial System Assessment (FSA) is
 based on the work of the joint IMF-World Bank Financial
 Sector Assessment Program (FSAP) Update mission to Georgia
 during February 15-28,2006. The principal objective of the
 FSAP Update was to assist the authorities in evaluating the
 potential vulnerabilities and development priorities of the
 Georgian financial system. Following reviews within the IMF
 and the World Bank. The report provides a summary of the
 main findings and recommendations. Some of he priority
 recommendations are : Crisis Management and Bank Resolution
 : establish formal crisis management team and develop a
 crisis management strategy and contingency plan. Financial
 Sector Supervision : amend law to give the NBG authority to
 establish fit and proper criteria for bank owners, to
 determine the source of the owners' capital, and to
 mandate changes in a bank's ownership. The same power
 should also be given to insurance and securities
 supervisors; also amend regulations to apply capital and
 other prudential requirements on a consolidated basis; and
 adopt legislation to stimulate cooperation and allow for the
 sharing of information among domestic financial sector
 supervisors. Financial Sector Development : develop, under
 the lead of the NBG, elements of the financial sector
 infrastructure, including low the value payments system and
 widespread use of electronic payment instruments throughout
 the country; develop a national strategy to address the lack
 of financial services in large parts of the country,
 especially in rural areas; and allow insurance companies to
 diversify their investments.