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Central Bank’s Powers Significantly Reduced

According to the permanent representative of the International Monetary Fund (IMF)  in Georgia Azim Sadykov, amid uncertainty caused by stripping  the central bank of a supervisory  role , commercial banks may face problems with the capitalization.

Parliament adopted amendments to the Law on the National Bank that envisage stripping   the National Bank of its banking supervisory functions and transferring them to a separate agency. During consideration of the draft document, a number of items have been changed, in particular in terms of the appointment of board members and its leadership. On the whole, the project developed by the Budget and Finance Committee of Parliament caused a negative reaction both from representatives of the banking sector and international organizations.

The Speaker of the Parliament Davit Usupashvili said that the comments were taken into account in the 2nd and 3rd reading of the draft. “Moreover, when the project was ready for adoption, we delayed its approval for a few more days to once again discuss the claims and comments. We held constructive consultations with representatives of international organizations, particularly with the IMF, and the majority of their comments have been  taken into account in the final version of the bill, “- said the Speaker of the Parliament.

According to the MP Tamaz Mechiauri involved in the work on  the law,  changes in the law on the National Bank will make its activities more transparent, which will allow it to enjoy a greater degree of confidence than it is now. The central bank  President himself has criticized the amendments saying that the weakening of the National Bank’s independence creates a risk for the economy as a whole. “The developers of the law do not hide they are guided by political motives and seek to control the banking sector,”- he says. At the same time, ex-Finance Minister Mirian Gogiashvili sees no danger in the creation of a separate bank supervision department.