Regulation of the Deposit Insurance System and Investment Portfolio Risk Management in Georgia

Abstract

The deposit insurance system, both in different countries of the world and in Georgia, is a dynamic, stable and effective mechanism for socio-economic development. The introduction and improvement of the deposit insurance system was related to the strengthening of the financial security system of the state and the private sector, the protection of depositors and the prevention of systemic crises in the banking sector.

Deposit insurance is a globally proven mechanism for depositor protection, which ensures the protection of deposits and, accordingly, depositors from the loss of deposits, and its main goal is to neutralize and mitigate the risks to banks in the event of an insured event. Accordingly, the main goal of the paper is to study and analyze the regulation of the deposit insurance system in Georgia and the management of investment portfolio risks, the mechanisms for reform management and its economic and financial effect.

The deposit insurance system reform in Georgia has been implemented since 2018, taking into account the experience of international practice and the recommendations of the World Bank. The basic principles on which the investment policy of the deposit insurance risk portfolio is based are the most important factors determining the success of the system. However, the problem is that despite the sharing of international multilateral, theoretical and practical experience, this reform is still in the process of development and requires the formation of a final result.

The investment policy of the deposit insurance risk portfolio provides the means and opportunities for its effective management and ensures the protection of deposits from various financial risks arising from insured events.