Howard ‘Skip’ Edmonds, IMF expert, is a resident advisor to the National Bank in banking supervision issues. The goal of his assignment, funded by the IMF, is to facilitate the improvement of the banking supervision.After the eight months of his work at the Bank, Howard ‘Skip’ Edmonds recognizes the improvement of the professional skills of the Banking Supervision specialists, but says that it is necessary for the banking inspectors to develop more critical thinking, and that the management needs to adequately react to the findings of the inspectors.The assignment of the IMF expert is aimed at sharing experience in banking supervision and providing consultancy the ultimate goal of which is to improve the quality of banking supervision and regulation. To assess the system’s efficiency, the IMF expert uses 25 Basel Core Principles for Effective Banking Supervision. To comply with these principles, the following areas were improved: the quality of financial analysis of the supervisors, statistic database, licensing and on-site inspection processes.Despite the overall positive assessment, the resident advisor finds that further improvement of the Georgian banking supervisory policy and the development of the legislative framework is necessary. “Implementation of effective banking supervision will help us avoid many unpleasant surprises. Before coming to Georgia, I worked in Indonesia. Inadequate supervision in this country and resulting failure of banks cost about 60 billion dollars”, Advisor says. In terms of the sustainability of the banking sector, Advisor positively assesses the consideration of introduction of deposit insurance scheme as it will serve to the considerable increase of the degree of protection of depositors.Howard ‘Skip’ Edmonds welcomes the increase of minimum regulatory capital for the commercial banks and says that the gradual increase of capitalization, by 2008, the landscape of the banking system will be quite attractive for foreign capital.