EU Twinning Project between the Polish Financial Supervision Authority and the National Bank of Georgia: Strengthening the National Bank of Georgia in the Field of Banking and Payment Services

modification date

Project description

Project title: “Strengthening the capacity of the National Bank of Georgia in the field of banking and payment services in line with the EU Standards”
Contracting Authority: Delegation of the European Union to Georgia
EU Partner: The Polish Financial Supervision Authority (UKNF)
Beneficiary Partner: The National Bank of Georgia (NBG)
Project implementation period: 1 March 2019 – 31 May 2021 (27 months)
EU Budget: EUR 1,750,000

Objectives of the twinning project
The purpose of this twinning project was to ensure stability and transparency of the financial sector by assisting the National Bank of Georgia (NBG) to improve overall financial supervisory mechanisms in line with the EU best practices.
The following results were projected: 

  • the revision and implementation of the Georgian banking legislation in accordance with the CRD IV/CRR Package, including Regulation (EU) No 575/2013 on capital adequacy requirements for commercial banks, fit and proper legislative framework for administrators and shareholders with qualifying holding, leverage ratio, Net Stable Funding Ratio, large exposures, corporate governance, licensing and transfer of significant ownership, internal capital evaluation and disclosure requirements;
  • the revision of the legal and implementation framework on payment services in line with relevant directives and regulations and in accordance with an inclusive and evidence-based approach including legislative amendments in place, prudential supervision framework developed, rules on execution of payment operations amended and operational, amendments to the rules of registration and cancellation of registration of Payment System Operators at the National Bank of Georgia developed, requirements of the strong customer authentication and the requirements for common and secure open standards of communication developed;
  • NBG staff trained and capable to apply new rules and regulations.

Project Partners

Polish Financial Supervision Authority (UKNF)
The Polish Financial Supervision Authority (UKNF) has operated since September 2006, and in January 2008 it became a fully integrated authority responsible for all sectors of the financial market in Poland. Initially, in 2006, the new regulator took over the duties of the Insurance and Pension Funds Supervision Commission and the Securities and Exchange Commission. On 1 January 2008, the UKNF took over the duties of the Commission for Banking Supervision. The Chair of the KNF Board is appointed by the Prime Minister for a 5-year term.
The Polish Financial Supervision Authority exercises supervision of the financial market, including banking supervision, capital market supervision, insurance supervision, pension scheme supervision, supplementary supervision of financial conglomerates, supervision of electronic money institutions, payment institutions and payment service bureaus, as well as supervision of cooperative savings and credit unions. The aim of the supervision of the financial market is to ensure the proper functioning of this market, its stability, security and transparency, confidence in the financial market, and to ensure that the interests of the market’s participants are protected.

National Bank of Georgia
The National Bank of Georgia (NBG) is the central bank of Georgia. Its status is defined by the Constitution of Georgia. The NBG was established in 1919. The National Bank of Georgia has existed in its current form since 1991.
According to the Constitution of Georgia, the NBG is independent in its activities. The members of Georgia’s legislative and executive bodies do not have the right to intervene in the NBG’s activities. The NBG exercises supervision over the financial sector for the purposes of facilitating financial stability and transparency of the financial system, as well as for protecting the rights of the sector’s consumers and investors.
The main objective of the NBG is to ensure price stability. The NBG shall ensure stability and transparency of the financial system and facilitate sustainable economic growth in the country, if this is possible without posing a threat to attaining its main objective.
The Governor of the NBG is appointed for a 7-year term by the Parliament of Georgia.
The NBG is the direct beneficiary of the Twinning Project and plays a crucial role in implementation of the project activities in all its components.

Scope and summary of the Project

The Project was sucessfully implemented during the period between March 2019 and May 2021 as part of two components, comprising the joint actions taken by the Polish and Georgian supervisory authorities to adapt the Georgian laws to the EU legislation in the field of the banking sector and payment services, in accordance with the requirements of appropriate directives and regulations, as well as the support in the implementation of those requirements. With the support of the Polish Financial Supervision Authority (UKNF), Georgia is now ready to fully adapt its national legislation to EU standards and financial supervisory mechanisms in banking and payment services. 

The Project activities were implemented under the following two groups:

1. Approximation and implementation of Georgian legislation with Union acquis in the banking sector in accordance with the CRD IV Package.
2. Approximation and implementation of Georgian legislation with the Union acquis in the area of payments through the revision of the legal and implementation framework on payment services in line with relevant directives and regulations and in accordance with an inclusive and evidence-based approach.

For more than 2 years of the Project, the joint actions of partners in Poland and Georgia, carried out with the EU support, have contributed to the achievement of the following results:

-  gradual approximation of the regulatory, supervisory and enforcement framework in line with the EU legislation and the requirements under the EU-Georgia Association Agreement;
- strengthening the NBG’s supervisory functions and capacities in terms of regulating the banking and payment services market in line with the EU acquis and best practices;
- support in improving effective financial supervisory mechanisms to protect beneficiaries of the banking and payment services sector and encourage financial market development in Georgia, as well as providing training to the employees of the NBG and preparing them to apply the new rules and laws.

The Project objective and results have been achieved thanks to effective and close cooperation among experts from the Polish and Georgian supervisory authorities. All activities, foreseen within 2 two components, including supplementary expert missions, have been implemented in line with the scope stipulated in the work-plan to the Project, in close cooperation with the Georgian Partner. 

The Project helped to strengthen the capacity of the NBG in the field of supervision of banking and payment services in Georgia through a comprehensive implementation of advisory and training actions. Over the period of 27 months, experts from the UKNF, in cooperation with experts from the National Bank of Georgia (and for actions falling within the relevant scope of competence, with experts from the National Bank of Poland, Bank of Lithuania, the Bank Guarantee Fund and the Financial Ombudsman’s Bureau) successfully completed a total of 61 specialised expert missions in Tbilisi and in the remote work mode. In response to the challenges related to covid-19, the UKNF transformed, in cooperation with the NBG, the complex structure of the Project from on-site missions into fully remote work mode. 

The Project focused on the contribution to the amendments and preparation for the implementation of the banking law in accordance with the CRD IV/CRR package and the revision of the regulatory and implementation framework for payment services in accordance with appropriate EU directives and regulations. The joint Project actions included the review and assessment of compliance of proposed or existing provisions of Georgian law with the EU rules laid down in the EU regulatory package, the analysis of legal gaps, formulation of recommendations on the proposed amendments to legal acts, expert consultations, and the exchange of Polish and Lithuanian experiences and practices, recommendations and guidance based on the experiences and best solutions adopted in Poland and Lithuania. 

The Project contributed to the enhancement of professional qualifications and institutional capacities of the National Bank of Georgia, through the interactive workshops and training sessions, focused on the transfer of know–how, experience, lessons learned and good practices based on the EU acquis with regard to the banking sector and payment services supervision. 

In the course of Project implementation, over 400 materials were elaborated and submitted to the Georgian Partner for supervisory use and to support the Georgian supervisor’s work on the gradual preparation of amendments to the legislation (such as recommendations with proposals for legal amendments, review reports with gap analysis, guidelines, handbooks, workshop and training materials). 

Considering the guidance and advice provided, a number of legal regulations and solutions have already been adopted or are at the stage of final consultations, preceding their implementation in Georgia.

Upon completion of the Project, appropriate laws will be adapted in Georgia in accordance with the EU rules; the NBG will have better financial supervisory mechanisms and increased institutional capacity in terms of banking and payment services. Better legislation, the supervisory methodology and standards adapted to appropriate EU rules and practices will improve the effectiveness of application of supervisory powers for a better protection of users of banking and payment services and for the development of the financial market in Georgia. Consequently, a sound financial market in Georgia will contribute to the economic growth as well as stability and better protection of financial market participants. 

The results of the Project for the banking and payment services sector in Georgia were summarised at an online conference held on 6 May 2021. The conference was attended by about 100 participants, including high-level representatives of the Delegation of the European Union to Georgia, National Bank of Georgia (NBG), Polish Financial Supervision Authority (UKNF), representatives of the government and public administration in Poland and Georgia, representatives of the NBG, the UKNF and other Polish and Lithuanian institutions engaged in the Project as well as representatives of Georgian commercial banks, payment institutions, other donors in the financial sector and media.

The last ninth Steering Committee meeting took place on 17 May 2021 and was dedicated to the discussion on the eighth quarterly report on the Project implementation during the period from March to May 2021 and summary of the succesful completion of all activities in line with Project assumptions and work-plan. The Final Report on Project implementaion will be delivered in the third quarter of 2021 for the approval by the Delegation of the European Union to Georgia.

News

  • 23 April 2021
On 30 March 2021, the participants of the eighth Steering Committee meeting approved the seventh quarterly report on the Project implementation during the period from 1 December to 28 February 2021, and on 25 February 2021,  by circulation, the eighth revision of the Work Plan to the Project to consider the updated scope and schedule of the final Project activities for the National Bank of Georgia (NBG). Due to the special circumstances caused by covid-19, expert missions are confirmed to continue in the remote work mode by the end of April 2021, and supplementary missions are to be held in the form of interactive workshops with Q&A sessions with regard to additional topics agreed upon with the NBG. 
Accordingly, the last intense series of remote missions was successfully carried out between January and April 2021, involving experts from the UKNF, National Bank of Poland (NBP), the Bank of Lithuania, and the NBG: 
1)    Under Component 1, the Polish and Lithuanian experts, in cooperation with the Georgian supervisory authority, carried out the final six expert missions as a continuation of measures to adapt the Georgian legislation in the area of banking sector to the rules laid down in the CRD IV/CRR package and to implement new supervisory practices according to EU rules (including joint expert consultations, the analysis of legal gaps in Georgian draft regulations, formulation of recommendations and raising the skills of the employees of the Georgian supervisory authority through participation in interactive training workshops) in the following thematic areas:
-    supplementary workshops in the scope of additional information regarding own funds, fit & proper assessment and remuneration from the perspective of the CRD IV/CRR package requirements (additional final mission no 8 as part of activity 1.1.1, carried out by experts from the UKNF);
-    capital requirements and risk management framework for investment firms in the context of implementation of the CRD IV/CRR package (one mission as part of activity 1.1.9, carried out by experts from the UKNF);
-    two missions with online workshops concerning EBA FINREP taxonomy focused on the practical application on the supervisory level and in banking system analyses from the perspective of the financial supervisory authority and the central bank, respectively (activity 1.1.10, mission no 1 carried out by experts from the NBP and mission no 2 carried out by experts from the UKNF);
-    continuation of on-the-job training for employees of the NBG, including exchange of experiences in the area of XBRL standard and EBA Data Point model applied in financial reporting systems (activity 1.1.11, mission no 4 carried out by an expert from the Bank of Lithuania);
-    additional support in the legislative work of the NBG in the area of supervisory framework for securitisation (continued activity 1.1.12, additional mission no 2 carried out by experts from the UKNF).
2)    Under Component 2, seven expert missions were conducted in the remote mode to continue to support the Georgian supervisor in its progressive work on the amendments to Georgian laws regarding payment services (the missions involved an analysis of draft acts of Georgian legislation, formulation of recommendations, experts consultations and on-the-job training for employees of the NBG, as well as sharing Polish and Lithuanian practices, experiences and proposals for legal and supervisory arrangements) in the following thematic areas:
-    additional support in the legislative work of the NBG in the area of payment systems and payment services on the banking system level, and sharing best practices of the central banks in Poland and Lithuania (continued activity 2.1.1, additional mission no 8 carried out by experts from the NBP and Bank of Lithuania);
­-    additional topics surrounding prudential supervision framework and exchange of supervisory practices in relation to payment service providers (continued activity 2.1.2, supplementary mission no 3 carried out by the experts from the UKNF);
­-    the rules of granting approval to operate payment systems, including a presentation of experiences and solutions of the Polish central bank (continued activity 2.1.4, mission no 2 carried out by the NBP experts);
­-    new remote workshops in regard to payment systems compliant with Directive (EU) 2015/2366 and CPSS-IOSCO Principles for Financial Market Infrastructures from the perspective of the banking system (continued activity 2.1.5, missions no 5 and 6 carried out by experts from the Bank of Lithuania and NBP);
­-    remote training to provide additional legislative support for the NBG, considering selected legal issues and supervisory practices in relation to payment service providers (mission no 4 under activity 2.1.6, carried out by experts from the UKNF);
­-    application of EBA guidelines concerning the Payment Services Directive (PSD2) (continued activity 2.1.1.9, mission no 2 carried out by experts from the UKNF).
The summary of joint Project activities and achieved results for the Georgian supervisory authority and the banking and payment services sector in Georgia will be presented after completion of the final activities in April and May, during the Project completion conference scheduled for 6 May 2021.
  • 4 January 2021
On 31 December 2020, the participants of the seventh Steering Committee approved the sixth quarterly report on the Project implementation during the period from 1 September to 30 November 2020 and the seventh revision of the work-plan to the Project to consider the updated scope and schedule of further project activities for the National Bank of Georgia (NBG). Moreover, due to the special circumstances related to the COVID-19 pandemic, a decision was made to continue the expert missions in the remote work mode in the first quarter of 2021.
New remote missions were successfully completed in November and December 2020, involving experts from the UKNF, the Polish Financial Ombudsman’s Bureau, the National Bank of Poland, the Bank of Lithuania, and the National Bank of Georgia.
1)    Under component 1, the Polish and Lithuanian experts, in cooperation with the Georgian supervisory authority, carried out another two expert missions as a continuation of measures to adapt the Georgian legislation in the area of banking sector to the rules laid down in the CRD IV/CRR package in the following thematic areas:
-    own funds requirements for operational risk for commercial banks – application of the Basic Indicator Approach and the Standardised Approach (continued activity 1.1.1, mission no 3 carried out by an expert from the Bank of Lithuania);
-    comprehensive credit risk mitigation method/collateral comprehensive method as defined by CRR (activity 1.1.14, mission carried out by the UKNF experts).
The work involved joint expert consultations, the analysis of legal gaps, recommendations, and support in the Georgian supervisor’s efforts to prepare new amendments to legal acts and to implement the supervisory practices according to EU rules.
2)    Under component 2, five experts missions were carried out to continue supporting the efforts of the National Bank of Georgia to prepare further amendments to the Georgian legislation on payment services in the following thematic areas:
-    new expert missions addressing topics of payment systems and payment services, from the perspective of supervision and consumer protection, i.e. 
- remote training on the reporting requirements under Directive (EU) 2015/2366 on payment services in terms of practices followed by supervisory authorities (continued activity 2.1.1, mission no 6 carried out by the UKNF experts);
- out-of-court system of consumer protection in relation to the banking and payment services sector (activity 2.1.1, mission no 7 carried out by the experts from the UKNF and the Polish Financial Ombudsman’s Bureau);
-    the rules on granting approval to operate payment systems (activity 2.1.4, mission no 1 carried out by the NBP experts);
-    regulatory technical standards for strong customer authentication and common and secure open standards of communication (continued activity 2.1.7, mission no 3 carried out by the UKNF experts);
-    comparability of fees related to payment accounts, payment account switching and access to payment accounts with basic features in the light of Directive 2014/92/EU (Payment Accounts Directive – PAD) (continued activity 2.1.8, mission no 2 carried out by the UKNF experts).

The above-mentioned missions involved a review and assessment of draft acts of regulations provided by the NBG, gap analysis and recommended amendments, interactive expert consultations and online workshops, sharing Polish and Lithuanian experiences and best practices, proposals for legal and supervisory arrangements as well as guidelines and recommendations.

  • 29 October 2020
On 28 September 2020, the participants of the sixth Steering Committee approved the fifth quarterly report on the Project implementation during the period from 1 June to 31 August 2020 and the sixth revision of the work-plan to the Project to consider the updated scope and schedule of further project activities for the National Bank of Georgia (NBG). 
Furthermore, on 22 October 2020, the UKNF and the Delegation of the European Union to Georgia agreed on project extension until end of May 2021, in order to ensure smooth, balanced and sustainable implementation of all Project activities, taking into account influence of COVID-19 pandemic to further implementation of the Project work-plan.
Due to the international and national restrictions related to the COVID-19 pandemic, the Project Leaders at the UKNF and the NBG decided to continue the expert missions in the remote work mode by the end of December 2020. 
Accordingly, another remote missions were carried out between August and October 2020, involving experts from the UKNF, the Bank Guarantee Fund, the National Bank of Poland, the Bank of Lithuania, and the National Bank of Georgia. 
1)    To continue the efforts to support the adaptation of the Georgian legislation in the area of banking as part of the CRD IV/CRR regulatory package under Project Component 1, the experts from Poland and Lithuania conducted another four remote missions in cooperation with the Georgian supervisor (including online consultations and workshops, the exchange of experiences, the analysis of legal gaps, recommendations and support in the Georgian supervisor’s efforts to prepare further amendments to legal acts according to EU rules) in the following thematic areas:
- prudential requirements (on own funds) for credit institutions and investment firms (activity 1.1.1, mission 6 carried out by experts from the UKNF and the Bank Guarantee Fund);
- supplementary interactive workshop in the scope of own funds as required by the Regulation 575/2013 on prudential requirements for credit institutions and investment firm (CRR), with exchange of information, best practices and practical experience of supervisory authority (activity 1.1.1, mission 7 carried out by experts from the UKNF);
- interactive training workshops for the NBG employees to share the knowledge and practical experience in the area of the XBRL standard and the EBA Data Point model applied in the financial reporting systems (activity 1.1.11, mission 3 carried out by the expert from the Bank of Lithuania);
- securitisation and exposures to transferred credit risk under CRR (activity 1.1.12, mission carried out by UKNF experts).
2)    Under Component 2, four expert missions were conducted in remote mode to continue to support the Georgian supervisor in its progressive work on the amendments to Georgian laws regarding payment services (the missions involved a review and assessment of draft acts of legislation provided by the NBG, the analysis of legal gaps, interactive experts consultations and online workshops, sharing Polish, Lithuanian and EU experiences and practices, and recommendations) with regard to:
- prudential supervision framework, including capital and own fund requirements and financial reporting requirements (activity  2.1.2, mission 2 carried out by UKNF experts);
- rules on execution of payment operations (activity 2.1.3, mission 2 carried out by UKNF experts);
- on-line workshops in regard to payment systems against Directive (EU) 2015/2366 and CPSS-IOSCO Principles for Financial Market Infrastructures on the banking system level (activity 2.1.5, mission 4 carried out by experts of the National Bank of Poland (NBP) and Bank of Lithuania);
- application of EBA Guidelines concerning the Payment Services Directive (PSD2) (activity 2.1.9, mission 1 carried out by UKNF experts).
  • 28 July 2020

On 25 June and 14 July 2020, the Steering Committee approved, without reservations, the fourth quarterly report on the Project implementation in the period from 1 March to 31 May 2020 and the fifth revision of the work-plan to the Project to consider the updated scope and schedule of further Project activities for the National Bank of Georgia (NBG).

Due to the international and national restrictions related to the COVID-19 pandemic, the Project Leaders at the UKNF and the NBG decided to undertake expert missions in the telework mode. The scope and dates of the experts missions were agreed upon following an assessment of the most urgent current needs of the NBG, considering the top-priority tasks and availability of experts from supervisory institutions and central banks in Poland, Lithuania and Georgia engaged in ensuring safety and stability of national financial markets.  

Accordingly, first remote missions were carried out between May and July 2020, involving experts from the UKNF, National Bank of Poland, the Bank of Lithuania, and the National Bank of Georgia. 

1)    To continue the activities supporting the adaptation of the Georgian legislation in the area of banking as part of Component 1 of the Project, the Polish experts conducted another three experts missions through telework in cooperation with the Georgian supervisor, that involved a review and assessment of compliance of draft acts of Georgian legislation with the European rules laid down in the CRD IV/CRR package (including online consultations and workshops, the exchange of Polish and EU experiences, as well as recommendations, gap analysis and assistance for the Georgian supervisor in its work on drafting new legal amendments) in the following thematic areas:

- recovery, resolution and intervention framework for commercial banks (activity 1.1.3, mission 2 carried out by the experts from UKNF and Banking Guarantee Fund);

- code of corporate governance, including remuneration related requirements in accordance with CRD and EBA standards (activity 1.1.5, mission 2 carried out by the UKNF experts);

- disclosure by competent authorities (CRD) and disclosure by institutions required by CRD (activity 1.1.8, mission carried out by the UKNF experts).

2)    Under Component 2, five experts missions were carried out in telework mode to continue the work supporting the adaptation of the Georgian legislation in the area of payment services, including:

- payment systems and payment services on the banking system level (continued activity 2.1.1, mission 5 carried out by the experts from the Bank of Lithuania and the National Bank of Poland);

- remote training in regard to different types of payment services and related threats as well as licensing requirements for payment service providers from the supervisory perspective (continued activity 2.1.6, mission 3 carried out by the UKNF experts);

- regulatory technical standards for strong customer authentication and common and secure open standards of communication (continued activity 2.1.7, mission 2 carried out by the experts from the Bank of Lithuania and the National Bank of Poland);   

- comparability of fees related to payment accounts, payment account switching and access to payment accounts with basic features in the light of Directive 2014/92/EU (PAD) (activity 2.1.8, mission 1 carried out by the UKNF experts);

- legal and practical supervisory aspects of Regulation (EU) 2015/847 on information accompanying transfers of funds in the context of prevention of money laundering (new activity no 2.1.11, carried out by the UKNF experts at the requests of the NBG).

The above-mentioned missions involved a review and assessment of draft acts of legislation provided by the NBG, the analysis of legal gaps, interactive experts consultations and online workshops, sharing Polish and Lithuania experiences and practices, recommendations, guidance and further support in the Georgian supervisor’s progressive efforts to prepare amendments to legislation.

  • 15 April 2020

On 20 March 2020, the Delegation of the European Union to Georgia approved, without reservations, the third quarterly report on the Project implementation in the period from 1 December 2019 to 29 February 2020 and the fourth revision of the work-plan to the Project to consider the updated scope of further Project activities for the National Bank of Georgia.
In February 2020, the Project activities focused on supporting the adaptation of the Georgian legislation in the area of banking as part of Component 1 of the Project. Experts from the UKNF and the Bank of Lithuania, in cooperation with the Georgian supervisory authority, conducted another three expert missions in Tbilisi that involved a further review and assessment of compliance of draft acts of Georgian legislation with the European rules laid down in the CRD IV/CRR package in the following thematic areas:
-    application of a standardised approach to credit risk (activity 1.1.1, mission no 2 completed by an expert from the Bank of Lithuania);
-    supervisory practices in regard to Capital Adequacy Requirement and Internal Capital evaluation (ICAAP, SREP, RAS) (activity 1.1.7, mission completed by the UKNF experts);
-    methods based on internal ratings with regard to the definition of capital requirements for credit risk (IRC credit risk approach) (activity 1.1.13, mission completed by the UKNF experts).
The missions involved analysis of legal gaps, expert consultations, exchange of Polish and Lithuanian experiences and practices, practical recommendations and guidance, support in drafting legal acts and supervisory methodologies for the assessment of Georgian banks (ICAAP and ILAAP) as well as training workshops to improve skills of the employees of the NBG and to support the Georgian supervisor’s work on the gradual preparation of amendments to the legislation.
Due to the international situation caused by the threat from COVID-19, the Project Leaders at the UKNF and the NBG have made a joint decision to temporarily suspend further expert missions scheduled for March and April 2020 in Tbilisi. The Project activities will be resumed as soon as the schedule and the available Project implementation methods are adapted to the current situation.
  • 18 February 2020

On 17 February 2020, the Delegation of the European Union to Georgia approved, without reservations, the second quarterly report on the Project implementation in the period from 1 September to 30 November 2019.

Between November 2019 and late January 2020, the following expert missions were successfully completed in Tbilisi, with measurable results to be used by the National Bank of Georgia in bank supervision:

1) As part of component 1, three successive expert missions were conducted in Tbilisi, which mainly involved further review and evaluation of compliance of drafts of Georgian legislation with EU rules laid down in the CRD IV/CRR package (including gap analysis and expert consultations, recommendations, sharing experiences and providing support in drafting amendments to the legislation), in successive thematic areas agreed with the Georgian partner, respectively:

- in regard to capital requirements and leverage for commercial banks (activity 1.1.1, missions nos 4 and 5 completed by experts from the UKNF and BGF in November and January 2019);
- in regard to corporate governance in the light of remuneration-related requirements in accordance with CRD and EBA standards, in particular at credit institutions (activity 1.1.5, mission no 1 completed by the UKNF experts in December 2019).

The second planned hands-on training was conducted for the staff of the NBG in the area of the XBRL standard and the EBA Data Point model, which involved sharing information and good practices (activity no 1.1.11, mission no 2 completed by a UKNF expert).

2) Component 2 involved completion of 3 successive expert missions in Tbilisi, focused on the further review and evaluation of drafts of legislation provided by the NBG (including gap analysis, expert consultations and sharing Polish and Lithuanian experiences and practices, recommendations and support in drafting legal acts) to the following extent:

- successive missions on topics regarding payment systems and payment services from the perspective of the supervision and banking system, including selected issues related to cross-border payments and implementation of Directive (EU) 2015/2366 on payment services in the internal market (PSD2) and Directive 2014/92/EU on the comparability of fees related to payment accounts (Payment Accounts Directive – PAD) (activity 2.1.1, missions nos 3 and 4 completed by experts from the NBP and the Bank of Lithuania in November 2019 and the UKNF experts in January 2020);
- in regard to the rules on execution of payment operations (activity 2.1.3, mission no 1 completed by the UKNF experts in November 2019).

Additionally, three hands-on training workshops were conducted for the NBG experts in regard to:

- payment systems against PSD2 and CPSS-IOSCO Principles for Financial Market Infrastructures from the supervisory perspective, including delivery of a handbook and presentation of practical case studies (activity 2.1.5, missions nos 2 and 3 completed by the UKNF experts in November and December 2019);
- oversight of the payment system infrastructure by the central bank, including sharing knowledge and good practices (activity 2.1.6, mission no 1 completed by the NBP experts in December 2019).
  • 12 November 2019

The first Project activities were successfully launched in June 2019 and are now continued with the active involvement of and in close cooperation between the experts:

- from Polish Financial Supervision Authority (UKNF),Banking Guarantee Fund (BFG), National Bank of Poland (NBP) and Bank of Lithuania,
- and from the National Bank of Georgia.

On 10 October 2019, the Delegation of the European Union to Georgia approved without reservations the first quarterly report covering the period from 1 March to 31 August 2019. 

The period from 1 June to 30 October 2019 resulted in successful completion of the following expert missions in Tbilisi with tangible results for the supervisory use by the National Bank of Georgia:

1) In Component 1, the first 6 expert missions implemented in Tbilisi focused on the review and evaluation of compliance of the draft Georgian legislation with the European CRD IV/CRR package (including the review and gap analysis, expert consultations with recommendations, and assistance in drafting legal amendments), with respect to:
- the minimum capital buffer requirements for commercial banks (Activity 1.1.1, mission no 1 delivered by an expert of the Bank of Lithuania);
- the fit and proper requirements for key managers and qualifying holdings of commercial banks as defined by CRD and delegated acts (Activity 1.1.2, missions no 1 and 2 delivered by the UKNF experts);
- NSFR (Net Stable Funding Ratio), recovery, resolution and intervention framework for commercial banks (Activity 1.1.3, mission no 1 delivered by the UKNF and BFG experts);
- the large exposures requirements for commercial banks within Basel and CRD/CRR requirements (Activity 1.1.4, 1 mission delivered by the UKNF experts);
- licensing and transfer of significant ownership as defined by CRD IV (Activity no 1.1.6, 1 mission delivered by the UKNF experts).

Moreover, the first on-the-job training concerning XBRL standard and EBA Data Point model with exchange of information and good practices was implemented for the NBG professionals (Activity no 1.1.11, mission no 1 delivered by the NBP expert).

2) In Component 2, the first 4 expert missions took place in Tbilisi, focused on the review and evaluation of drafts of laws provided by the NBG (gap analysis, interactive expert consultations and workshops, knowledge sharing, best practices, recommendations and assistance in legal drafting) with respect to:

- payment systems and payment services from the perspective of a supervisor and banking system (Activity 2.1.1, missions no 1 and 2 delivered respectively by experts of the UKNF, the NBP, and the Bank of Lithuania);

- prudential supervision framework (capital and own fund requirements, financial reporting requirements) (Activity 2.1.2, mission no 1 delivered by the UKNF experts);

- regulatory technical standards for strong customer authentication and common and secure open standards of communication (Activity 2.1.7, mission no 1 delivered by experts of the NBP and the Bank of Lithuania).

Furthermore, two on-the-job trainings for the NBG professionals were implemented with regard to:
- payment systems under Directive (EU) 2015/2366 and CPSS-IOSCO Principles for Financial Market Infrastructures on the supervisory level (Activity 2.1.5, mission no 1 delivered by the UKNF experts);
- payment services in respect of PSD2, EBA and RTA guidelines on the supervisory level (Activity 2.1.6, mission no 1 delivered by the UKNF expert).

Additionally, the Twinning Project kick-off meeting took place on 30 July 2019 in Tbilisi, with participation of high level representatives of the Delegation of the European Union to Georgia, National Bank of Georgia (NBG), Polish Financial Supervision Authority (UKNF), government and public administration in Poland and Georgia, key experts from the NBG, UKNF and the National Bank of Poland, as well as representatives of commercial banks, payment institutions and media in Georgia.

Project Contact Information
Polish Financial Supervision Authority
Joanna Lipowczan
Project Manager, International Cooperation Department
E-mail: joanna.lipowczan@knf.gov.pl

Adam Janiszewski, Resident Twinning Adviser
E-mail: adam.janiszewski@knf.gov.pl
Tel: +48 22 262 56 15

National Bank of Georgia
2 Sanapiro St., 0114 Tbilisi, Georgia
Giorgi Dziguashvili, Resident Twinning Adviser Counterpart
E-mail: giorgi.dziguashvili@nbg.gov.ge
Tel: +995 322 406 276

Delegation of the European Union to Georgia
64b Chavchavadze Avenue, 0179 Tbilisi, Georgia
E-mail: delegation-georgia@eeas.europa.eu
Tel: +995-32-236 43 64

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