On Monday, March 21st, European Commissioner for Trade, Cecilia Malmström visited ISET for a discussion of EU-Georgian economic relations, with an emphasis on DCFTA (Deep and Comprehensive Free Trade Area). She was accompanied by Janos Herman, Ambassador of the European Union to Georgia, and Natalie Sabanadze, Georgia’s Ambassador to the EU.
In her address, Ms. Malmström explained the benefits of open markets and improved regulations for Georgian consumers. According to her, economic openness brings two types of benefits. On the one hand, it implies greater competition and a broader variety of products available in the domestic market; on the other, it also brings opportunities to increase exports. For these opportunities to materialize, Georgia would have to create a stable and business-friendly environment that would attract potential investors, foreign and domestic.
Why do central banks regulate commercial banks and not that of, say, bakeries? This was the fundamental question Giorgi Kadagidze, a former governor of the National Bank of Georgia, tried to answer during his presentation for ISET students, faculty, and executives enrolled in ISET’s Finance for Professionals course on Tuesday, March 15.
According to Mr.Kadagidze, banks, unlike bakeries, operate with other people’s money. They are taking deposits and are transforming them into loans. Mr.Kadagidze used an ordinary balance sheet to demonstrate some of the basic principles of banking regulation: “fit and proper” (essentially to make sure that a bank’s shareholders and principals are not thieves); capital adequacy (how much own capital does a bank has to compensate depositors in case some of its loans go bad); asset quality (for instance, are loans too concentrated in a particular sector), and liquidity (does the bank have enough cash to handle an increase in short-term obligations).
2016 marked 20 years of BP’s successful partnership with Georgia, elevating the country’s role in the global economy and helping its economy and civil society. (We should note that BP has been instrumental in the creation of ISET. It was a key member of the initial donor consortium behind ISET with a core contribution of more than $2.3mln.) To celebrate this remarkable milestone, ISET hosted Mr. Chris Schlueter, Head of BP’s Georgian Section. Mr. Schlueter’s presentation started with two videos featuring BP’s 2015 Energy Outlook and comments by Spencer Dale, the company’s Chief Economist, which shed light on global energy production and consumption patterns, the increasing role of renewables, as well as current and future energy price dynamics.
Mr. Schlueter explained that the world oil market is saturated. Not only does supply exceed demands, but storage facilities are also full to the brim. This suggests that oil prices will not recover any time soon. On the one hand, low oil prices hurt high cost oil producers in the US, bringing many projects to a halt, and reducing supply in the medium term. Unfortunately, cheap oil also hurts efforts to curb consumption of carbon energy, and reduces the amount of funding available for research into low emission and energy efficient technologies and renewables.
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