In 2020, the NBG developed and published the first Supervisory Strategy document, setting out strategic priorities for 3 years (2020-2022). The NBG updated the Supervisory Strategy every year, while the supervisory priorities remained unchanged for 3 years. The new strategic priorities and corresponding  tasks for the next three years (2023-2025) will be included in the new Supervisory Strategy, on which the NBG has already started working.

 

The NBG will practice greater transparency in developing its new strategy. For this purpose, to ensure the active involvement of the banking sector and other stakeholders, the National Bank of Georgia publishes a Questionnaire and invites the sector to share their views.

 

It will be important for the new Strategy document to incorporate the recommendations of the IMF/World Bank joint Mission within the 2021 Financial Sector Assessment Program (FSAP). The Mission developed a number of recommendations for the development and refinement of the NBG's supervisory framework. As a rule, these recommendations considerably define the current and future supervisory priorities and plans of the NBG, and these will be widely covered in the new Supervisory Strategy document. The reports compiled by the Mission are published on the websites of the IMF and the World Bank, however, we offer a list of the key recommendations here:

 

Financial Stability Assessment (see the report)

• According to the mission's recommendation, in order to deal with risks, it is important to ensure the enforcement of retention of earnings until pandemic-related uncertainties dissipate, credit losses are absorbed and capital buffers are fully restored;
• The mission has also recommended the implementation of the regulation "on concentration of risk positions and large risks", which is already included in the plan of the National Bank.

 

Financial Sector Oversight (see the report)

The Mission recommended to:

• Formalize and enhance the governance of key internal processes for supervisory operations and decisions;
• Review the internal GRAPE scoring and weighting methodology;
• Carry out regular in-depth assessments of banks’ governance and risk management practices.

 

Financial Safety Nets (see the report)

The Mission recommended to:

• Implement a prompt corrective action framework for banks;
• Take steps to be able to implement a bridge bank swiftly when needed;
• Proceed with preparing resolution plans for systemic banks;
• consider whether other banks should be prioritized for resolution planning.

 

Financial Sector Competition (see the report)

According to the mission's recommendation, it is important to:

• Develope institutional capacity for competition enforcement and advocacy as a separate function within NBG.
• Carry out impact assessments of laws and regulations in the financial sector from a competition perspective, based on the recommendations of the joint mission of the International Monetary Fund and the World Bank (FSAP) and based on the needs identified in practice.

 

Cyber Security Oversight

• NBG’s role in designating a bank or FMI as a critical information system should be clearly articulated in amendments to the information security law;
• It is recommended to strengthen the framework for offsite supervision of cyber risk and automate the compliance monitoring process.

 

Financial Market Infrastructure (see the report)

The Mission recommended to:

• Develope detailed procedures for oversight of payment systems;
• Complete self-assessments of the two Central Securities Depositories.(NBG, GCSD)

 

Please feel free to express your views on the new Supervisory Strategy through the Questionnaire by August 31, 2022. For additional questions or difficulties, please contact us: Supervisorystrategy@nbg.gov.ge.