The experts of CUPEI&MERTES, the KFW contractor company, will hold meetings at the National Bank in order to prepare the legislative framework for deposit insurance system. Per David Amaglobeli, vice-president of the National Bank, the legal and organizational forms of the deposit insurance agency is being discussed with the KFW experts. There are two versions – deposit insurance agency and fund together, or separately. The Bank is the initiator of the establishment of deposit insurance system. This system is one of the important instruments to increase the public confidence in the banking sector. If a bank fails, a depositor will receive the amount determined under the deposit insurance scheme. This in turn will facilitate the growth of the deposit base and make banks more active in their financial mediation role. The increased deposits will make the commercial bank borrowings cheaper, and simulate the reduction of the loan interest rates. The competition in the banking system will also increase, vice-president said. A failure of one bank will not cause destabilization in the market. This factor will make the system even more stable. The commercial banks will pay the set amount to the deposit insurance scheme. The KFW will allocate the initial capital of EUR 3.5 million With the assistance of CUPEI&MERTES experts, the members of the work group established at the decree of the President of the National Bank will be familiarized with the deposit insurance models at the international conference in Berlin in autumn. Besides, the NBG will get to know the Ukrainian experience where the deposit insurance scheme has been in operation since 1999. The work on the draft law on Deposit Insurance System established at the decree of the NBG President and the assistance of the German experts will be completed by the year-end. Afterwards the draft law will be forwarded to the legislative authorities for review.