The National Bank of Georgia within the financial stability framework develops Macroprudential Policy Strategy. The Strategy lays down the cornerstones for implementing macroprudential policy in Georgia with a view to fostering the decision-making process as well as communication and accountability to the general public. The NBG’s Macroprudential Policy Strategy closely follows the European Systemic Risk Board’s (ESRB/2013/11) recommendation and the best international practice and it is consistent with EU directives.

The ultimate objective of the NBG’s macroprudential policy lies in making a material contribution to safeguarding the stability of the Georgian financial system as a whole. In order to make macroprudential policy operational, transparent and accountable, the NBG identifies intermediate objectives. In line with the ESRB/2013/1 recommendation and taking into account Georgia’s specifics, the NBG has identified five intermediate objectives of macroprudential policy:

 

• Mitigate and prevent excessive credit growth and leverage.
• Mitigate and prevent excessive maturity mismatch and market illiquidity.
• Limit direct and indirect exposure concentrations.
• Limit the systemic impact of misaligned incentives with a view to reducing moral hazard.
• Reduce dollarization of the financial system.

These intermediate objectives are mapped into corresponding indicators and macroprudential policy instruments, which are necessary to achieve these objectives. Thus, the strategy will support achieving the macroprudential policy’s ultimate objective: financial stability in Georgia.