Financial Stability Committee to be created in Georgia

In order to facilitate the stable operation of the financial system in Georgia, the Committee on Financial Stability is planned to be set up which will be responsible for financial crisis and crisis management mechanisms.

The relevant changes were prepared by the National Bank of Georgia (NBG) and the Ministry of Finance, which was initiated during the June 10 bureau sitting.

The draft law defines that the Committee includes the Finance Minister, the President of the National Bank, the Deposit Insurance Agency and the Heads of the Insurance Supervision Service, but the Committee may include other representatives of other state/ administrative bodies too.

The draft law specifies that the Committee is chaired and represented by the Minister of Finance and in case of his absence - his acting Finance Minister.

As for the activities of the Committee, it will hold the session at least once a year or in case of the National Bank's request.

The functions of the Secretariat of the Committee are fulfilled by the National Bank. According to the amendments, the NBG will be obliged to inform the Committee of Financial Stability about the potential threats and risks and provide the necessary information.

The National Bank has to also inform the Committee on the need for the commercial bank resolution, temporary state financing or the national bank's special funding.

In turn, the Committee members are tasked to provide the Committee with all necessary information, including confidential information, the risks identified, which may be important for the functioning of the Committee.

The committee's activities report will be published together with the National Bank's annual report.

In addition to this, the creation of the Resolution Committee of the National Bank of Georgia is also planned.

The draft law states that the committee will be created under the decree of the President of the National Bank, which will include the President and the Vice-President of the NBG.

The committee meetings will be attended by other employees of the National Bank or invited persons if the attendees are required to make an informed decision on the matter.

The draft says the Committee of the Resolution is chaired by the President of the National Bank. The composition of the Resolution Committee and the procedure of its activities shall be determined by the National Bank of Georgia's Legal Act.

The Committee approves the resolution plans adopted by the National Bank and makes a decision on the introduction of a resolution on the commercial banks, as well as in respect of the executive powers in the resolution of the commercial bank, issued by the National Bank act.