Leading International Edition The Banker Publishes an Article by Koba Gvenetadze
"The timely and courageous measures taken by the National Bank of Georgia have mitigated the impact of the pandemic on the country's economy," The Banker, a leading financial publication, described the steps taken by the National Bank of Georgia.
According to the President of the National Bank, constant readiness for the crisis is vital. Koba Gvenetadze emphasizes the importance of effective and consistent financial measures taken before the crisis, as a result of which the Georgian financial sector met the shock caused by the pandemic in a well-prepared manner and maintained flexibility.
"Our experience shows that external shocks are a common occurrence for a small, open economy like Georgia. The pandemic recession is fundamentally different from previous crises. The economy has suffered enormous losses in many ways. The global pandemic-like shock we face now. Thanks to proactive and consistent measures taken in the pre-crisis period, the Georgian financial sector has met the shock of the pandemic in a well-prepared manner and has maintained its resilience," he said.
Since 2016, we have been increasing the volume and quality of capital and liquidity buffers in the banking system. The benefits generated by commercial banks and the additional capital requirements imposed by the National Bank have enabled commercial banks to accumulate sufficient buffers of capital and liquidity and to deal effectively with the crisis. The accelerated transition to the additional requirements stage has been facilitated by good financial performance, strong shareholder support, and access to international markets: Georgia's banks are mostly foreign-owned, and the shares of the two largest banks are listed on the London Stock Exchange. In addition, in recent years we have taken significant macroprudential measures to reduce household surpluses and loan dollarization, which has helped reduce the vulnerability of the non-financial sector and increased the flexibility of the financial system, ”said Koba Gvenetadze.
The article notes that in order to reduce the excess growth, the National Bank has enacted a regulation on responsible lending to individuals. Annual growth in household lending has declined, and more funds have been made available to finance legal entities to increase business lending and investment.
The article emphasizes that the policy of the National Bank of Georgia "fixing the roof while the sun is shining", the financial system was well prepared for the crisis.
According to the President of the National Bank, in order to deal with the current challenges of the economy, in addition to working on political measures, the National Bank pays great attention to long-term policies that will promote inclusive and sustainable growth of the economy. Initiatives in the field of financial technologies also remain a priority on the agenda.
Full article on The Banker