Why the capital market should be separated from the National Bank’s supervision? - expert assessments

In recent years, the growth rate of the Georgian capital market  slightly, but still has accelerated.

The financial sector hopes that the upward trend will continue in the coming years, especially as Georgia seeks EU membership that boost the country’s and the companies’ improvement in investment rating.

Representatives of the financial sector say that in unison with the development of the capital market, regulation should be changed; in particular, it should not be regulated by the central bank but by another body specially created for this purpose.

According to a Research Director at PMC Research Center, the fact that the National Bank is a regulator can be the reason for a low pace of the capital market development - a separate regulatory body will give more freedom to the sector.

“When the capital market was separated from the National Bank’s supervision, the pace of development of the capital market was quite high. In the last 15 years, a lot of effort has been made to develop the capital market in Georgia, but the real goal to build a secondary market has not yet been achieved,” he says.

At the same time, the Georgian banking sector is too developed that hinders the growth of the alternative capital market.

“The launch of a new regulator, which will give more freedom to the sector, will probably be more productive,” says Giorgi Khishtovani.

Ayet Kukava, CEO of JSC Alliance Group Holding, believes that the country’s capital market should not be regulated by the National Bank, it should be managed by professionals, including qualified foreign specialists.

“The capital market regulator should be a competitive structure and not a department of any institution, it should be separated from the National Bank, the supervisory body should be highly qualified, we can invite ambitious specialists from Harvard and the world’s leading universities. We should realize that our competitors in the region are rich oil countries such as Dubai, Kazakhstan and Azerbaijan. If we want to compete with them, then the capital market must be regulated by a highly qualified structure ,” the businessman points out.