Georgia: Technical Assistance Report-Operationalizing the New Bank Recovery and Resolution Framework
IMF Staff Country Reports, January 10, 2023
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Bibliographic details
- Published: January 10, 2023
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400230097.002
Overview
- Purpose: Operationalize Georgia’s new bank recovery, resolution, and crisis management frameworks.
- Context: Georgian authorities indicated interest in operationalizing their recovery, resolution, and crisis management frameworks.
- Progress noted: Georgia has made considerable progress in developing the infrastructure needed for an effective bank recovery and resolution regime.
Key findings and analysis
- Temporary public funding arrangements:
- The report highlights the need to analyze alternatives to the current temporary public funding arrangements.
- Emphasis on assessing the scope to deploy all such funding through the Resolution Fund.
- Consideration of the potential use—subject to strict safeguards—of the deposit insurance fund to finance resolution actions.
- Escalation process weaknesses:
- The current escalation process from going-concern to gone-concern does not provide the supervisors with sufficient and adequate triggers to mitigate risks at a sufficiently early stage.
- The mission recommends clarifying Article 30 of the Banking Law, which explicitly mentions only the temporary administrator as early intervention measures.
- Institutional capacity:
- A key recommendation of the mission is to strengthen the National Bank of Georgia’s resolution function.
- Contingency planning:
- The mission provided guidance on the general architecture of intra- and interagency contingency plans, which serve as the building blocks for a national financial crisis preparedness plan.
Policy recommendations and operational guidance
- Analyze alternatives to current temporary public funding arrangements, including:
- Deploying all temporary public funding through the Resolution Fund.
- Potential, conditional use of the deposit insurance fund for financing resolution actions (subject to strict safeguards).
- Clarify legal provisions:
- Amend or clarify Article 30 of the Banking Law to expand or specify early intervention measures beyond the temporary administrator.
- Strengthen resolution capacity:
- Enhance the National Bank of Georgia’s resolution function to improve implementation and operational readiness.
- Build contingency planning architecture:
- Develop intra- and interagency contingency plans as foundational elements for a national financial crisis preparedness plan.
Content in this bundle
- 1geoea2023001 - Preface