Sophio Khundadze

Effective Deposit Insurance System: a Case Study of Georgia Sophio Khundadze

Political developments of Georgia in August, 2008 proved low level of public confidence resulting in panic runs to banking institutions whenever the issue of political or economic stability is raised. Key to this dilemma can be implementation of deposit insurance system. This initiative was implemented in many post Soviet States (e.g. Russia, Ukraine, Baltic States, Azerbaijan, etc.). Post development observation of the process showed the positive effect of deposit insurance policy over banking system. However, the last attempt to contextualize this project in Georgia failed. The book once again raises the necessity of deposit insurance system to ensure healthy banking environment and highlights the readiness of the Georgian banking environment for implementation of the system. The most effective model of deposit insurance system for Georgia is suggested.