The Future of Banking_28 March 2022 by The FINANCIAL

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28 March, 2022

Supporting Ukraine: Activating our philanthropy, tools and network for humanitarian relief efforts By MICHAEL FROMAN, MASTERCARD

As the humanitarian emergency continues to unfold, our first priority has been the well-being and safety of our employees and their families. To support the region more broadly, we are mobilizing the breadth of our assets in support of NGOs, governments and financial institutions and their crisis response efforts; in our work with our partners to direct funding and humanitarian aid where it can provide Continued on p. 2

COINSPAID – 6 billion worth in crypto processed in 2021, one of the faster and more secure wallets out there By GELA MEGENEISHVILI Q. What products does CoinsPaid offer its clients? A. CoinsPaid has developed an all-round ecosystem that allows businesses to fully leverage cryptocurrencies in their business models. We

enable customers to operate worldwide, decrease costs and reach new markets while using our reliable crypto processing services and wallets. While CoinsPaid does indeed provide solutions for individuals, its main focus is to serve the Continued on p. 6

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"NBG is planning to regulate crypto market in Georgia",

well as an impulse for greater foreign direct investments into the economy. The former will help narrow a current account deficit while the latter may give rise to solid foreign currency inflows as well as import of know-how. Other things being equal, all these are expected to result in a medium-run appreciation dynamics in effective exchange rate of lari. The financial sec-

tor would also benefit from subsequent improvements in the external balance - through lower risk premia, stronger resilience, and greater stability - especially for a financially dollarized country like Georgia. Q. US and EU are imposing sanctions on Russia Continued on p. 3

TBC with uzbekistan and azerbaijan markets to reach 10 million users, 30th anniversary By GELA MEGENEISHVILI

hile representing the Georgian banking sector and attracting investors across the globe, TBC has been at user’s service for 30 years.

The Georgian startup turned into a global success story, the three decades of growth was a journey full of challenges and obstacles that the company managed to overcome. Today TBC represents the finest quality of financial services across the globe and has been transformed into an international fintech provider. The

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FINANCIAL reached out to Vakhtang Butskhrikidze, the CEO of TBC who spoke about the journey since day one. Q. What does it mean to be operating for 30 years in the Georgian market? What were the greatest achievements of TBC? Continued on p. 4

USAID and TBC Sign Strategic Partnership Memorandum

n the event hosted by USAID Deputy Administrator Isabel Coleman, who is on an official visit to Georgia, and TBC Bank CEO Vakhtang Butskhrikidze, TBC and USAID have signed the memorandum of a strategic partnership that aims to strengthen Georgia's economic diversification and sustainability. With the USAID partnership, TBC will be able to expand access to finance and enhance business support services to encourage economic growth, women in entrepreneurship, and help businesses Continued on p. 11

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Supporting Ukraine: Activating our philanthropy, tools and network for humanitarian relief efforts

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By MICHAEL FROMAN, MASTERCARD

cross the world we continue to watch the devastating events unfolding in Ukraine. The people of Ukraine have been affected in ways that most of us could not imagine, and our thoughts continue to be with those impacted, including our colleagues, our customers and our partners. As the humanitarian emergency continues to unfold, our first priority has been the well-being and safety of our employees and their families. To support the region more broadly, we are mobilizing the breadth of our assets in support of NGOs, governments and financial institutions and their crisis response efforts; in our work with our partners to direct funding and humanitarian aid where it can provide the greatest impact; and in leveraging our network reach to support and secure transactions on the ground in Ukraine, as well as by Ukrainian customers. These efforts include:

Humanitarian Relief and Volunteer Efforts Donated $2 million to support the relief initiatives in Ukraine and surrounding countries welcoming refugees. Of this, $1.25 million was allocated to the International Red Cross and $500K to Save the Children, who are on the ground helping provide children and families with immediate aid, such as food, water, hygiene kits and psychosocial support; and $250,000 to our Employee Assistance Fund (EAF), which directly benefits our impacted employees. Deploying an additional $3 million from the Mastercard Impact Fund to further support humanitarian relief efforts (food, shelter, medical care, etc), as well as aiding the financial security and driving small business programs for migrants’ longer term economic integration.

$1MM in donations will prioritize local chapters of international NGOs or local, smaller NGOs to ensure local entities have the financial resourced they need to support migrants $2MM will be deployed to ensure more medium-term support for refugees as they try to re-establish their economic livelihoods. The Mastercard Center for Inclusive Growth is currently in conversation with other companies about a coordinated philanthropic response to the longer term economic integration of Ukrainian migrants as the scale of the challenge will be too big for Mastercard to tackle on its own. Engaging our employees who are donating their time and helping to further raise funds by making contributions to relief efforts with a one-to-one match from the company As an example of our volunteerism efforts, more than 50 New York employees packed 3,850 pounds of medical supplies and hygiene kits for nonprofit AFYA Foundation to ship to Ukraine. Based in Yonkers, New York, the AFYA Foundation delivers vital medical supplies to those in need around the world.

NGO and Government Support Supporting NGOs, governments, and financial institutions in their crisis response efforts by contributing our donation technology to fundraising campaigns and providing critical cyber tools to prevent fraud and protect operations. We are partnering with merchants to launch point-of-sale round-up campaigns that offer consumers the option to round up their purchase to the next dollar/Euro and donate their spare change to charities. We’ve launched campaigns in Spain with Bonpreu supporting Red Cross in distributing water, bedding, hygiene sets, blankets, and baby products. In France, we are working with merchants Cora and Fnac to raise

funds for the World Food Programme for food distribution in Ukraine and refugees in neighboring countries. We have launched a co-branded donations site in the U.S. to mobilize contributions to the American Red Cross and Save the Children. We are offering our RiskRecon capabilities free of charge to impacted financial institutions to help them detect vulnerabilities and secure operations.

Helping Ukrainians Access Funds on their Mastercard Cards Together with PayPal we are enabling Ukrainian consumers to cash out funds from their PayPal Wallet directly to their Mastercard card. This is enabled through our Mastercard Send service for consumers in Ukraine to access funds being sent to them from outside the country. Both organizations are temporarily not charging any fees for this program in Ukraine. We remain focused on ensuring the integrity and resiliency of our systems in Ukraine. This includes supporting our Ukrainian customers throughout this crisis with the temporary reduction of interchange fees. Our Cyber & Intelligence and Corporate Security teams are working with governments and partners around the world to ensure the stability, integrity and resiliency of both our systems and theirs. We are committed to active monitoring and rapid response to cyber-attacks, the threat of which is heightened significantly in the present environment. There are many challenges ahead and the people of the Ukraine need our ongoing and unrelenting support. We join with so many others in hoping for a more peaceful future for us all. MICHAEL FROMAN, Vice Chairman and President, Strategic Growth

HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | 28 March, 2022

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"NBG is planning to regulate crypto market in Georgia",

Koba Gvenetadze, Governor of National Bank of Georgia Q. How US-Georgia Free Trade Agreement will affect Georgian National currency or financial sector as whole? A. A free trade agreement with the US, like any other agreements of this kind, may reasonably be expected to benefit the Georgian economy in a number of ways. Potential gains primarily include a boost to exports of goods as well as an impulse for greater foreign direct investments into the economy. The former will help narrow a current account deficit while the latter may give rise to solid foreign currency inflows as well as import of knowhow. Other things being equal, all these are expected to result in a medium-run appreciation dynamics in effective exchange rate of lari. The financial sector would also benefit from subsequent improvements in the external balance - through lower risk premia, stronger resilience, and greater stability - especially for a financially dollarized country like Georgia. Q. US and EU are imposing sanctions on Russia that continues escalation of situation in Ukraine. As we know Russia will be cut of USD and other western money resources. How this will affect Georgia’s financial sector or businesses? A. Ukraine and Russia are Georgia’s main trading partner countries. Geopolitical tension can be reflected on the Georgian economy through both direct and indirect channels. Geopolitical turmoil will significantly worsen economic outlooks in both countries. While Ukraine will suffer from immediate consequences of the military conflict, Russian economic growth prospects would drastically deteriorate as a result of sanctions. Deteriorated economic growth in both countries will dampen their demand and we will face some fall in exports of goods and tourism as well as in remittances from those countries. Meanwhile, geopolitical tensions make the region riskier for investors. Hence, it would increase sovereign risk premia, resulting in weaker capital flows in the region and elevated depreciation pressures on domestic currencies that may ultimately translate into inflationary pressures. While this is a yet another unfavorable development for the Georgian economy, for the last 6-7 years thanks to consistent macro management framework our macroeconomy has shown resilience to several pronounced external shocks. This is what international financial institutions as well as rating agencies have repeatedly emphasized. Q. Russia is the number one in terms of money transfers to Georgia, thanks to the huge number of Georgian job immigrants there, or Georgians living in Russia. Please evaluate how Sanctions will be affecting money transfers? A. Over the last couple of years, dependency on money transfers from Russia has been falling and was significantly reduced as remittances have become more diversified. Currently, the share stands at only around 17% (17.5% in 2021), while 8-10 years ago the figure was more than 50%. It is also worth noting that in case of effective restrictions on electronic transfers some part of inflows from Russia might be substituted by transporting cash individually across the border. Q. Does NBG considers joining western countries in the series of sanctions? or are you going to cut money turnover with Russian banks? A. The National Bank of Georgia has always operated and continues to operate in full compliance with the standards set by international resolutions. The United States, Great Britain, EU and other countries have imposed sanctions on Russian financial system due to Russia’s aggressive military activities in Ukraine. The National Bank of Georgia instructed the representatives of the Georgian financial sector to comply with the requirements of these sanctions. Q. What are you expectation about GEL depreciation? A. Georgia is a small open economy with a floating exchange rate regime meaning that exchange rate may freely fluctuate due to changing market conditions. Thus, in the short run, it is virtually impossible to pin down dynamics in the exchange rate or to forecast its short-run trajectory. Even in the

Koba Gvenetadze, Governor of National Bank of Georgia

longer run, over which an exchange rate is believed to be mostly influenced by macroeconomic fundamentals, current high degree of uncertainty makes it extremely difficult to make predictions. While, on one hand, end of the pandemic and subsequent recovery in tourism is supposed to improve current account balance and ease pressures on the exchange rate, on the other hand, current geopolitical turmoil creates substantial risks in the opposite direction. Q. Recently NBG approved new code of ethics regulating communication with borrowers and keeping personal information. Please explain what are the new requirements and why they were necessary. A. Protecting the rights of consumers in the financial sector is one of the important tasks of the National Bank of Georgia. Hence, the NBG strives to improve current practices to align them with international best practices and address underlying challenges. The National Bank has approved a Code of Ethics for debt collection by financial institutions which is based on the requirements applied in developed economies and international best practice, reflecting the peculiarities of the local financial sector and the important issues raised by consumers. The enactment of the code will help strengthen the reputation of financial institutions as trusted partners in the eyes of consumers, and protect consumer rights and interests in the best way practicable, while ensuring that financial institutions conduct business relationships based on the principles of good faith, transparency and fairness. The Code introduces the obligations of the financial institutions vis-à-vis the customers in the process of collecting debt, which includes but are not limited to the following important issues: Obligation to provide correct information to the customer, adhere to ethical and moral norms, and communicate in a business and polite manner. In dealing with customers and contact persons, the financial institutions should not provide misleading and/or incorrect information to them. The information that is delivered, undelivered, inaccurately and/or incompletely provided to the customer should not motivate them to make a decision that they would not have made if they had accurate and complete information. The Code establishes a procedure for contacting customers and contact persons. It includes the form of communication, time and a list of information to be provided and/or sought. Contacting a contact person will only be possible in the cases provided for in the

current/active contract, while contacting related third parties will only be possible to determine the location of the borrower. It is not permitted to share information on customer liability with a third party. The concerned persons can be contacted only in the period from 09:00 AM to 20:00 PM. In addition, the contact person is entitled to request the financial institution to terminate communication with them. The financial institutions now have an obligation to maintain records of communication with customers and contact persons and to keep them for a period of two months. Disposal of the loan portfolio, with some exceptions, will be allowed only to entities under the supervision of the National Bank of Georgia. However, if the loan portfolio is managed by another entity, the entity subject to the supervision of the National Bank of Georgia will be responsible for the compliance with the requirements of the Code, etc. The new requirements are meant to improve the quality of consumer protection in the financial sector. The National Bank will continue to monitor market practices and upgrade the applicable regulatory framework as necessary. Q. As you know interest rates of mortgage loans in GEL at Georgian banks increased significantly. While rates for USD loans remain low. Do you think that NBG regulations are limiting individual borrowers seeking USD loans and giving advantages to companies that can get larger loans in USD. A. When comparing GEL mortgages to foreign currency alternatives, interest rate differential is not the only factor for consideration. Taking USD credit makes the borrower whose income is in Georgian lari exposed to the currency risk, which is significant, given the exchange rate volatility that we or the countries in the region experience. Moreover, the major part of FX mortgage loans are floating interest rate loans, further exposing the clients to the interest rate risk. This is especially noteworthy considering historically low levels of US dollar and Euro interest rates and their potential rise during upcoming periods. On the other hand, to address elevated inflationary pressures, NBG has already tightened monetary policy and the current rate stands at highest level for the decade. It is worth mentioning that most of the borrowers have income in GEL and fully unhedged to currency fluctuations. To mitigate the risk, NBG’s responsible lending regulation requires stronger borrower level buffers when taking FX credit. In addition, to protect the most vulnerable, Civil Code mandates

lender to issue less than 200,000 GEL equivalent loans in local currency only. The companies which borrower larger amounts have a flexibility in currency choice but at the same time they are more capable to manage risks or use hedging instruments. Q. What is the estimated turnover of crypto currency in Georgia? A. Due to the fact that the VASP sector is not regulated at this stage, we do not have accurate data on this issue. However, the fifth Round Mutual Evaluation Report of Georgia which was published in September 2020 by Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism – MONEYVAL states that the exchange transaction volume can be between GEL 3.5 to 5 million (EUR 1 to 1.5 million) per month. Q. Does NBG plan to regulate crypto market in Georgia? A. Yes, the NBG is planning to regulate crypto market in Georgia. To this regard we have developed an initial draft of the relevant legislative changes in accordance with Financial Action Task Force requirements. We are also benefitting from technical assistance of the International Monetary Fund staff in the development of this regulatory framework. Draft of Legislative changes at this stage includes registration / licensing, compliance testing and AML control requirements for crypto market players. It should be noted, however, that before aforementioned regulations enters into force, some measures have already been taken by the NBG. In particular, financial institutions have been banned from providing virtual asset exchange and transfer services. Also, persons that carry out activities related to virtual assets should be classified by financial institutions as high risk clients and should be subject to appropriate enhanced preventive measures. Q. Currently there is only one Russian bank operating in Georgia. Are you going to revoke the license in a lights of sanctions? A. We are legally restricted to share any supervisory information that NBG plans to undertake with regard to a specific bank. But we can say that one of the main tasks of the National Bank of Georgia is to ensure the stability of financial sector. Protecting the interests of financial sector depositors is one of the main priorities under this mandate. Our task is to guarantee the safety of each depositor’s funds in the Georgian financial system. The interests of all depositors will be protected and the liabilities will be fully satisfied.

the future of banking

HEADLINE NEWS & ANALYSIS 28 March, 2022 | FINCHANNEL.COM

TBC with uzbekistan and azerbaijan markets to reach 10 million users, 30th anniversary By GELA MEGENEISHVILI

While representing the Georgian banking sector and attracting investors across the globe, TBC has been at user’s service for 30 years. The Georgian startup turned into a global success story, the three decades of growth was a journey full of challenges and obstacles that the company managed to overcome. Today TBC represents the finest quality of financial services across the globe and has been transformed into an international fintech provider. The FINANCIAL reached out to Vakhtang Butskhrikidze, the CEO of TBC who spoke about the journey since day one. Q. What does it mean to be operating for 30 years in the Georgian market? What were the greatest achievements of TBC? A. What fascinates me the most was the growth TBC went through alongside the economy of Georgia for the past 30 years. The company has been developing with our country and I believe the success of TBC is a bold statement from a Georgian company conducting business within and outside of our borders. Today TBC stands out as a company traded on the London Stock Exchange, is part of the FTSE 250 index, and has attracted investments across the world from counties such as the USA, UK, and Europe. Our endeavor has led us to become one of the 3 Georgian companies enlisted on the London Stock Exchange and introduced our economy to the world. These feats act as an outstanding example for other Georgian companies to follow our success. Q. What managing TBC was like at its early stages and how did the responsibility and challenges change throughout the years? What are the core values that the company has maintained since day one? A. TBC was founded as a small startup with flexible solutions. Time by time our challenges grew with our scale. Today we serve over 5 million users across 3 countries, and our ambition is to expand even more in other countries. We understand

Vakhtang Butskhrikidze, CEO of TBC Bank

the scale of our goals, however, despite it, we try to maintain the philosophy of a startup company, its simplicity in management and have clear goals in mind. We live in the 21st century and TBC aims to keep implementing cutting-edge technology. Following the technological transformation over the past few years, we have emerged as a tech company that offers financial services. The core value that has been maintained since day one is being user-oriented. TBC exists to simplify lives for our users and processes for businesses and while the scale and services change dynamically the mission remains the same. This is the philosophy that transformed TBC into a household brand over the years and our customers appreciate our efforts. Q. How does the technology by

TBC simplify our lives? What are the primary objectives while creating any product? A. Modern technology has enabled us to witness a completely new reality. Nowadays only 1% of the transactions are made through physical subsidiaries while 99% are made digitally. The statistics were drastically different a decade ago. Transactions required physical presence in the bank, and customers were forced to allocate precious time. Now the same processes can be completed with a click of a button and we have saved our users a couple of hours which they can spend to their liking. The new reality is an accomplished mission only possible through our strive towards simplifying lives. Q. What would be the years of breakthroughs in fintech for TBC Bank? When did online products

first gain relevance for Georgian users when did they become mainstream? A. I believe TBC and the Georgian banking sector are quite advanced and rival global players in the transactional business, even exceeding them in some aspects. The digital service quality is outstanding and we see the potential to transform our sales to digital as well. Most of the sales today are made through subsidiaries and much like in the transactional business, we will shift it towards digital in a few years. We will maintain physical offices, however, sales made digitally will be made much more convenient for our customers. I believe the past 10 years have been revolutionary for transactional business and similar changes will arrive in sales in the following 5 years. Q. How did TBC transform into a tech company and when/how did raising technology change your vision? A. The journey has been quite challenging as the transformation not only intends to recruit IT specialists but to change the fundamentals of management philosophy. Today TBC is represented by the largest IT department and all of the programs are created within. In the past, we outsourced 80% of such tasks. This was a drastic change for us which rose business and technological challenges. The tech transformation is an endless process and we keep developing it to new heights. While the majority of change was initiated 3-4 years ago, we are ready to take new steps and challenges. Technology is moving rapidly and we release several small changes per week. If our development continues smoothly we aim to reach the state where we release 100s of daily updates. Q. What are the plans for the future? What would be the long-term (10 years) goals, important projects, and challenges the bank is likely to face? A. It is hard to predict the future 10 years forward, but we will keep going with our mission in mind to simplify lives. What I can predict is the growth of our scale and we will keep developing relevant technology to adapt to our market and users. While the picture 10 years forward is uncertain, TBC is aiming high and we are planning to reach the milestone of 10 million users within the next 3 years. Q. What is the importance of expansion? How would you estimate the Azerbaijan and Uzbekistan markets? What would be the shortterm/long-term goals and risks? A. Historically TBC mostly grew within Georgia, however, in the last 3 years we have decided to expand to the international market and the technology enables us to do so. We are represented in Uzbekistan, where we have been operating for a year and amassed almost half of the userbase we were able to gain in Georgia through 30 years. Operating in a larger significantly increases our scale and international penetration will enable us to achieve the milestone of 10 million users. Currently, we are only presented with the mobile banking app in Uzbekistan and we are planning to keep penetrating new markets with our technology only. International users are able to use the mobile banking app to save a deposit and receive loans and this is the model which we will continue to push.

HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | 28 March, 2022

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WEEKLY UPDATE FROM THE CHIEF ECONOMIST RAPID OR DELAYED RESOLUTION?

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the future of banking

HEADLINE NEWS & ANALYSIS 28 March, 2022 | FINCHANNEL.COM

COINSPAID – 6 billion worth in crypto processed in 2021, one of the faster and more secure wallets out there By GELA MEGENEISHVILI

cording tocrypto.com, the number of crypto users has almost doubled and amounted to

While cryptocurrency continues its rapid growth in popularity, companies are quickly adapting and implementing innovative payment methods. CoinsPaid unites multiple products that guide companies and individuals through the world of cryptocurrency and offers a wallet whose security and speed surpass many competitive brands. The Financial reached out to George Paliani, CoinsPaid Media CEO, to discuss the company’s activities and among other eyeopening topics.

222 million from February to March 2021. At the same time, the number of Bitcoin holders decreased from 63% to 51%, while the percentage of other cryptocurrencies’ owners grew from 35% to almost 50%. The world is moving from centralized fintech towards an independent and promising decentralized one.

Q. What products does CoinsPaid offer its clients? A. CoinsPaid has developed an allround ecosystem that allows businesses to fully leverage cryptocurrencies in their business models. We enable customers to operate worldwide, decrease costs and reach new markets while using our reliable crypto processing services and wallets. While CoinsPaid does indeed provide solutions for individuals, its main focus is to serve the B2B market. The industries we enable include iGaming, PSP companies, esports, e-commerce, the entertainment industry and others. Currently, we are the world’s number one crypto processor with regard to the volume of iGaming transactions — we’re proud of this achievement. We provide crypto processing, B2B and B2C wallets, retail wallets (still in beta), OTC desk, SaaS solution, token integration, transactions and much more. We also released our CPD utility token that is used for internal crypto operations and client incentives. It unites all CoinsPaid products and projects. Q. How many users does CoinsPaid have worldwide? How do your financial figures stand in 2022? A. Based on the latest report, we can count over 800 companies as our clients who handle their transactions via our crypto processing solutions. In 2021, we had over 9 million transactions worth more than $6 billion, which is three times more than in 2020 and six times more than 2019. In addition, we also carry out more than 7% of all Bitcoin transactions worldwide. As for CPD tokens, there are over 1300 token holders globally on all three chains that we operate. Q. What are the advantages of

George Paliani, CoinsPaid Media CEO

paying with cryptocurrency and using the CoinsPaid wallet? A. The first advantage is international reach. This is especially important for businesses that operate in multiple markets. When using crypto, these companies don’t need to connect to various payment systems in the respective countries. It’s groundbreaking: Any user from any country can make payments using cryptocurrency, which presents an unbeatable opportunity to increase the number of merchants. Secondly, there are no limits in regards to the number of transactions, as is the case for bank transfers. Clients can receive and send any amount of crypto. We don’t believe in enforcing caps. Thirdly, crypto payments have an excellent transaction speed. The need to wait for several banking days for the money to be credited to an account is eradicated; it takes only a few minutes, or even seconds, for transactions to go through. Q. What are the commissions for managing accounts on CoinsPaid and how does it compare to the in-

dustry standard? A. We offer a very generous deal. Customers pay a small percentage that is clearly stated in the commercial offer. At CoinsPaid, we believe in transparency, meaning clients get what they see. There are no extra fees for integration or maintenance. During the partnership, we work with clients individually and offer better conditions on commissions for larger holdings. For a large number of transactions, the commission less than 1%, and we are proud to offer competitive conditions that make us stand out on the market. Q. How do you think the pandemic has contributed to the growth of CoinsPaid and the phenomenon of cryptocurrency in general? A. The pandemic has changed the world, which means we were required to develop and adopt new solutions to work with the new reality. World has switched from cash to bank cards, then to complex payments, with cryptocurrencies being the next evolutionary step. Interest in cryptocurrencies is growing. Ac-

The industry as a whole is adding more development opportunities, such as the mass adoption of tokens, NFTs, metaverses and so on. Currently, there is a tug-of-war between the crypto market and regulators. Many countries try to centralize cryptocurrency circulation. For instance, China has been testing the digital yuan since 2020, and in 2021 France, Russia, Venezuela, South Korea and other countries began introducing their digital currencies. It is interesting to see how regulations will affect cryptocurrencies in Georgia and worldwide. Q. How secure are the user data and payments on the CoinsPaid wallet? What is the technology used? A. We understand the essence of security. I would like to mention that we have an Estonian license and have also created such an ecosystem that shows our clients all the steps we take towards creating secure solutions. All our products are designed with the philosophy of asking ourselves what we can do to make our funds even more secure? CoinsPaid is a cloud-based crypto processing system audited and approved by the best security supervisor companies, such as 10guards. In 2019, we were one of the first companies to pass the Kaspersky labs audit, highlighting our commitment to cybersecurity. Q. How does a crypto wallet compare to the traditional account at the bank? What are the differences? A. Using a crypto wallet is more convenient to receive and conduct transactions in crypto. The wallet also includes a bank account and enables clients to withdraw funds. In the crypto wallet, clients can initiate invoices and operate as a standard business with all the included features. The distinctive characteristics of using our crypto wallet are the speed of transactions and no commission to the banks for many types of international payments. Q. What are the advantages of blockchain technology compared to the traditional banking system? A. Decentralized finance uses emerging technology to remove third parties such as banks from transactions. As mentioned earlier, this gives businesses many advantages, such as increased transaction speeds and the opportunity to buy goods, like real estate or other commodities, in a fast, efficient and secure way. Moreover, no approval is needed for banks or any international organizations as it gives you access to your own money. Crypto is the future currency. More and more businesses conduct transactions with digital assets worldwide, and the trend keeps on growing. Q. What are the five most used cryptocurrencies at CoinsPaid? A. The top five most used cryptocurrencies at CoinsPaid are Bitcoin, Tether, Litecoin, Bitcoin Cash, Cardano and Ethereum.

HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | 28 March, 2022

CoinsPaid is one of the world's largest crypto payment ecosystems, operating on the market since 2014. By now, CoinsPaid has established itself as one of the most reliable platforms with crypto processing, OTC, B2B and B2C wallets, rebranded innovative SaaS solution, as well as profitable reference program for partners. In developing its services, the company follows the mission to create and deliver an affordable, comfortable and secure tool for working with cryptocurrencies and fiat money.The existing CoinsPaid ecosystem grants merchants access to different products within a single interface. In 2022 CoinsPaid has got 800+ online B2B clients using its services, and this number is consistently growing. The statistics issued in January 2022

the future of banking

show that the company has processed over 7.6 billion euro in crypto. Compared to 2022, the company now has reached an increase of over 354% in the transactions turnover.

Due to the constantly rising demand for our products, the growing popularity of crypto globally and requests for DeFi, CoinsPaid oﬃcially launched CPD token in 2021 and will add DeFi solutions within the ecosystem in 2022.

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HEADLINE NEWS & ANALYSIS

factcheck

28 March, 2022 | FINCHANNEL.COM

Salome Samadashvili

Roman Gotsiridze

Member of Parliament

STATEMENT:

VERDICT:

“PERHAPS WE CAN HEAR AN EXPLANATION AS TO HOW THE GEORGIAN DREAM ACCOMPLISHED A SHARPLY INCREASED ENERGY DEPENDENCY ON RUSSIA.” FACTCHECK CONCLUDES THAT SALOME SAMADASHVILI’S STATEMENT IS FALSE.

ANALYSIS: At the plenary session of the

Parliament of Georgia, MP from Lelo, Salome Samadashvili asked a question to GNERC chairperson, Davit Narmania: “My question is about the major challenge this country faces – energy security. How is it that the Georgian accomplished a sharp increase in our country’s energy dependency on Russia in the course of the last years? Since 2014, electricity import has doubled and 60% of our electricity comes from Russia. Energy from Russia increased by 12% in one year alone.” Hydro power plants (HPPs) constitute the major source of energy generation in Georgia. According to 2021’s data, the share of HPPs in the total energy generation was 80.5% followed by thermal power plants with 18.8% whilst wind energy generation is negligible and amounts to only 0.66%. In the reporting period (2014-2021), the total generation increased from 10.4 billion kwt/h to 12.6 billion kwt/h which is a 21.2% growth. Of additional note is that the Enguri and Vardnili HPP cascades account for 33.2% of the total generation (this

According to the Table 1, electricity import from Russia in nominal indicators has indeed doubled since 2014 as compared to 2021 and Russia’s share accounts for 62% of the total import. However, Russia’s share has shrunk by 15 percentage points as compared to 2014 because Russia’s share in the total electricity import was 77% in 2014. In addition, the share of Russian electricity import includes that energy which is supplied to Abkhazia. The Energy Service Company started to compile these statistics in 2019 and figures of the past years are as follows: According to the data, the share of energy supplied to Abkhazia in energy imported from Russia has been rising in the past year. This indicates that the growth of electricity import from Russia is attributable to that fact. Therefore, if we deduct the volume of energy supplied to Abkhazia from the electricity imported from Russia it turns out that the share of import from Russia in the total import significantly declines and drops to 20% instead of 62%. However, since the Energy Service Company started to compile these statistics from 2019, we cannot make a comparison to

and is a major artery for Armenia’s gas supply. Prior to 2017, Georgia was receiving 10% of the total volume of natural gas as a transit fee a. Since 2018, Russia’s Gazprom Export pays a transit fee in a monetary form whilst the amount of payment is a commercial secret. The current demand for natural gas in Georgia has been within the margin of 2.2 billion cubic meters on average in the past few years whist there are some deviations from this average stipulated by climatic conditions or other factors. In regard to the market supply component, local extraction of natural gas is negligible and its share in the total consumption is around 0.3-0.4%. Therefore, Georgia depends on imported natural gas. Table 3 shows natural gas supply in terms of supplying countries. According to the statistical data, the share of Russian gas in total import is marginal and has decreased from 11.7% to 7.9% over the past years. However, the Russian gas in the total import dropped by 1.7% whilst in 2019 and 2020 as compared to 2018 but increased again and reached 7.9% as mentioned earlier. It is unclear

Table 1: Electricity Balance (Million Kwt/h) Year

Generation

Total Consumption

Consumption in Abkhazia

Import

Import from Russia

2014 2015 2016 2017 2018 2019 2020 2021

10,369.6 10,832.6 11,573.6 11,530.4 12,148.6 11,856.8 11,159.8 12,645

10,715 11,042 12,435 12,815 13,198 13,145 12,413 15,328

1,638 1,797 1,927 2,002 1 922 2,060 2,554 2,956

793 699 479 1,497 1,509 1,627 1,610 2,006

607 511 369 452 207 525 571 1,245

Russia’s Share in Russia’s Import in Import Total Consumption 77% 73% 77% 30% 14% 32% 36% 62%

5.7% 4.6% 3% 3.5% 1.6% 3.9% 4.6% 8.1%

Source: Energy Service Company is according to 2021’s data whilst the average figure of the previous years was 38.3%). In accordance with a verbal agreement, 40% of the generation of these HPPs is supplied to the Russian-occupied Abkhazia. Given the increased consumption in the past years, 40% is not enough and, in fact, the occupied territory receives a comparatively higher share energy generated by these HPPs which is 44.8% annually. Electricity consumption bears a seasonal character. At the same time, since nearly 80% of electricity generation comes from HPPs, electricity generation drops in winter and rises in warmer periods, simultaneously with increasing water resources owing to environmental conditions. Therefore, the country has a shortage of electricity in winter but a surplus in summer. Therefore, since it is impossible to accumulate electricity, Georgia sells electricity in warmer periods of the year (mostly to Turkey) and purchases electricity from Azerbaijan and Russia in colder periods. We take a look at statistical data in order to understand the extent to which Georgia depends on Russia in terms of electricity imports.

2014’s figure. It would be appropriate to measure the extent to which the share of energy imported from Russia has increased in the total energy consumption. In 2014, this figure was 5.7% whilst the same figure increased to 8.1% in 2021; that is, by 2.4 percentage points. However, there is a one-time significant factor behind this growth. In particular, from 20 January to 7 April 2021, the Enguri HPP was fully shut down for planned repair work. Since Abkhazia does not have an alternative source of energy, the total import of energy from Russia was carried out through the Georgian electricity system which technically caused an exaggeration of import from Russia. In regard to gas supply, Azerbaijan is major gas supplier for Georgia and Georgia receives gas for the social sector and TPPs for reduced prices in line with the contracts signed with Azerbaijan’s state oil and gas company (SOCAR) and the Shah-Deniz consortium. However, at the same time Georgia also buys Russian gas which the country receives from the North-South main gas pipeline. This pipeline transmits 2.22.3 billion cubic metres annually

what Salome Samadashvili means by a 12% growth. If she compares 2020’s figure to 2019, then Russia’s gas import had a 26% growth as opposed to the 12% in her claim. In sum we may say that Georgia’s current energy sector dependence on Russia is not alarming. However, there has been a slight growth trend in the last years which is not desirable and more robust work is needed to reduce this dependency. Growth in energy imports in the past years has been attributable to increased energy consumption in Abkhazia in the past few years which the author of the statement disregards. In order to assess dependency on Russia, it is more appropriate to measure the share of Russian import in the total consumption rather than share of Russian import in the total import. In this case, there is a slight growth which is largely attributable to the scheduled shut down of the Enguri HPP for repair work. Therefore, a straightforward claim that dependency on Russia under the Georgian Dream has increased sharply is wrong. Author: Veriko Sukhiashvili

Table 2: Natural Gas Supply in Georgia (Million Cubic Meters) Year

Total Consumption

Import

Import from Russia

Share of Import from Russia in Total Import

Import from Azerbaijan

2015 2016 2017 2018 2019 2020

2,287 2,125 2,248 2,176 2,485 2,482

2,513 2,260 2,344 2,286 2,592 2,573

295 122 135 39 162 204

11.7% 5.4% 5.8% 1.7% 6.3% 7.9%

2,080 2,133 2,201 2,223 2,421 2,342

Source: Energy Service Company

Share of Import from Azerbaijan in Total Import 82.8% 93.5% 93.9% 97.2% 93.4% 91%

“GEL 15 BILLION IN SALARIES ARE PAID IN GEORGIA AND INCOME OF 45% OF THOSE WHO RECEIVE SALARIES, IS GEL 500 AND LESS.” FACTCHECK CONCLUDES THAT ROMAN GOTSIRIDZE’S STATEMENT IS MOSTLY TRUE.

RESUME: The figures to which Roman

Gotsiridze is referring are from statistics on taxable (before taxes) salaries. In 2019-2020, nearly GEL 15 billion was paid annually in salaries whilst the annual salary of 45% of total wage-earner physical persons is GEL 6,000 (on average GEL 500 per month). At first glance, these numbers are fully in line with Roman Gotsiridze’s figures. However, if we take a look at monthly salary payments, we will see that on average only 23% of employees has a salary less than GEL 500. This means that many people had unstable

(for instance students) and these make the average salary figure look exaggerated. Ultimately, Roman Gotsiridze is right in emphasising that many people earn a low salary which is indeed a harsh reality. However, since this statement requires additional clarification, FactCheck concludes that Mr Gotsiridze’s statement is MOSTLY TRUE.

ANALYSIS United National Movement

member and MP, Roman Gotsiridze, stated at the hearing of the Minister of Finance in the Parliament of Georgia: “GEL

this figure (GEL 500 per month) does not provide a comprehensive picture in terms of the distribution of income over the course of a year. In particular, the annual statistics provide the total sum which was paid to people as a salary. For an employee who did not receive a salary for the entire year, the averaged figure does not reflect the full salary dynamic. For instance, those individuals who received salaries of GEL 1,000 for six months and did not receive a salary in the next six months for a number of reasons are registered to have a GEL 500 monthly salary.

Table 1: Taxable Income Received as Salary in 2019-2020

Margin Above GEL 0 and less than or equal to GEL 1,200 Above GEL 1,200 and less than or equal to GEL 2,400 Above GEL 2,400 and less than or equal to GEL 3,600 Above GEL 3,600 and less than or equal to GEL 4,800 Above GEL 4,800 and less than or equal to GEL 6000 Above GEL 6,000 and less than or equal to GEL 7,200 Above GEL 7,200 and less than or equal to GEL 9,600 Above GEL 9,600 and less than or equal to GEL 12,000 Above GEL 12,000 and less than or equal to GEL 15,000 Above GEL 15,000 and less than or equal to GEL 20,000 Above GEL 20,000 and less than or equal to GEL 25,000 Above GEL 25,000 and less than or equal to GEL 30,000 Above GEL 30,000 and less than or equal to GEL 40,000 Above GEL 40,000 and less than or equal to GEL 50,000 Above GEL 50,000 and less than or equal to GEL 60,000 Above GEL 60,000 and less than or equal to GEL 70,000 Above GEL 70,000 and less than or equal to GEL 80,000 Above GEL 80,000 and less than or equal to GEL 90,000 Above GEL 90,000 and less than or equal to GEL 100,000 Above GEL 100,000 Total

Source: Revenue Service

employment and did not receive a salary every month (for instance, seasonal employment). In other words, part of the employees in those months when they had jobs received salaries over GEL 500, although they had no salary income in the next few months. However, since the context of the MP’s statement is to highlight low income instead of the assessment of wage policy, it is relevant to use average annual figures when discussing salaries earned by the population. Of additional note is that Roman Gotsiridze’s statistics are about gross salary and, therefore, the net salary for people is even less which lends further credibility to his argument. However, on the other hand, the statistics do not include people employed in the informal sector (for instance private tutors or outdoor vendors) and at the same time includes people who do not have uninterrupted employment for objective reasons or for their own choice

2019 2020 Number of Taxable Number of Taxable Physical Income (GEL Physical Income (GEL Persons Million) Persons Million) 142,426 81 191,159 95 105,152 189 101,491 180 89,332 267 85,294 256 79,953 336 75,771 318 73,467 397 70,649 382 64,083 423 62,367 413 116,516 973 111,027 928 95,335 1,029 91,569 992 91,516 1,225 98,253 1,322 95,415 1,653 103,585 1,790 54,818 1,221 59,366 1,321 30,863 843 32,994 902 32,870 1,130 33,761 1,159 16,955 756 17,653 787 10,044 549 9,964 544 6,246 404 6,338 410 4,415 330 4,704 352 3,161 268 3,281 278 2,284 216 2,402 228 9,652 2,370 10,113 2,453 1,124,503 14,659 1,171,741 15,110

15 billion in salaries are paid in Georgia. Of this amount, 45% are for people whose income is GEL 500 and less.” A salary is only source of income for many people. Other sources of income can be interest earning, dividends, profits, scholarships, rent income, etc. The Revenue Service processes information about the salaries paid and the people who are paid these salaries. The figures in Roman Gotsiridze’s statement match with the statistics of the number of physical persona and taxable incomes (before taxes) received as salaries. Roman Gotsiridze’s statement gives an impression that the monthly income of 45% of employed individuals is GEL 500 or less. In 2019-2020, nearly GEL 15 billion was paid annually in salaries whilst the annual income of 45% of total wage-earner physical persons was within the margin of GEL 6,000. However, averaging

In order to analyse the “inequality” of wage distribution, the salary dynamic should be discussed in a monthly prism. Table 2 provides the relevant statistics. These figures show that a significant part of the population does indeed have a GEL 0-500 salary and this amounts to 23% of employed individuals on average in a year. However, this figure is certainly much lower as compared to 40%. Thirty-five percent of employees receive salaries within the margin of GEL 1,000-2,400. Since the aforementioned statistics show taxable income, it should also be taken into account that the net income of the population is even less. Therefore, it is only natural that the statistics of the Revenue Service do not take into account self-employed individuals or those employed in the shadow economy who do not pay income tax. Therefore, the full statistics in the country are varied.

Table 2: Monthly Distribution of Taxable Salary in 2021 0-500

JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

28%

23%

22%

21%

25%

23%

21%

23%

24%

22%

16%

500-1,000

28%

30%

26%

28%

27%

25%

26%

19%

1,000-2,400

32%

35%

34%

37%

34%

35%

36%

37%

38%

2,400-3,600

10%

12%

3,600 and above

15%

Source: Revenue Service

HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | 28 March, 2022

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HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | 28 March, 2022

EU trade in agricultural goods reached €347 billion The FINANCIAL

n 2021, the value of trade (imports plus exports) of agricultural goods between the EU and the rest of the world hit €347.0 billion, €20.7 billion more than in 2020. The EU exported €196.9 billion worth of agricultural products and imported €150.0 billion, generating a surplus of €46.9 billion. Between 2002 and 2021, EU trade in agricultural products more than doubled, equivalent to average annual

growth of almost 4.8%. In this period, exports (5.4%) grew faster than imports (4.2%).

UK and Brazil: biggest export and import partners In terms of main trade partners, when it comes to exports, the United Kingdom was the main partner with a 21% share of extra-EU exports of agricultural goods (equivalent to €42.1 billion), followed

by the United States (12%; €24.4 billion), China (8%; €16.5 billion), Switzerland (5%; €10.1 billion), Japan (4%; €7.3 billion) and Russia (4%; €7.1 billion; mainly vegetable products and foodstuffs). Extra-EU imports originated mostly from Brazil (9%; €13.4 billion), the United Kingdom (9%; €13.0 billion), the United States (6%; €9.3 billion), Norway (5%; €7.3 billion), China (5%; €6.9 billion) and Ukraine (5%; €6.9 billion; mainly vegetables and oils and fats).

Russia’s invasion of Ukraine is increasing economic uncertainty in the UK and globally The FINANCIAL

he Bank of England condemns Russia’s unprovoked invasion and the suffering inflicted on Ukraine. The Bank is working closely with the Government to support its response in coordination with the FCA as well as other UK and international authorities. The Bank’s Financial Policy Committee (FPC) supports this condemnation and welcomes these actions. The invasion is increasing economic uncertainty and will increase pressure on borrowers. For example, sustained increases in energy prices resulting from the conflict are likely to put pressure on household incomes and business earnings. The FPC is monitoring developments in the financial system closely. It stands ready to take any measures necessary to help ensure UK financial stability. Markets are volatile — so far, core financial markets have continued to function Some financial markets have

been volatile. Energy prices have risen sharply, as have the prices of other commodities where Russia and Ukraine are important producers. Although market volatility has increased, so far core financial markets have continued to function. But there’s a risk that global financial conditions could tighten further and that further volatility could affect core financial markets. Major UK banks are resilient to a wide range of risks The UK banking sector is resilient to a wide range of severe scenarios. It remains highly capitalised and liquidity ratios are strong. UK banks also have low direct exposures to Russia. The FPC remains of the view that major UK banks are able to withstand severe market and economic disruption. Crypto technology can offer benefits and more regulation is needed to reduce UK financial stability risks Crypto technology uses complex computer code to record who owns what. It enables new cryptoassets, and new, decentralised, means of providing financial services. The under-

lying technology could bring a number of benefits, including lower transaction costs and more choice for users. Those benefits can only be realised and innovation can only be sustainable if it is undertaken safely. The FPC is monitoring a number of channels through which cryptoasset markets and activities could pose risks to UK financial stability. For example, some cryptoassets (‘unbacked cryptoassets’) have no intrinsic value and are vulnerable to major price corrections. Investors may lose all their investment. Direct risks to the UK financial system from cryptoassets are currently limited. However, they will present a number of financial stability risks if they continue their rapid growth, and as they become more connected to the financial system. As these markets and activities grow, better regulatory and law enforcement frameworks are needed in the UK and elsewhere. This will help manage risks, encourage sustainable innovation, and maintain broader trust and integrity in the financial system.

the future of banking USAID and TBC Sign Strategic Partnership Memorandum

high-paying jobs. It is planned to mobilize $ 30 million in financial resources to support micro, small and mediumsized businesses in Georgia for the future. Priority will be given to rural enterprises and businesses run by women, on top of that more than 1,200 high-paying jobs will be created and help businesses generate $ 6 million in sales. "USAID's Strategic Partnership with TBC will significantly strengthen and foster the growth of the Georgian economy. TBC is a leading institution for economic growth and financial stability in the region. This strategic partnership and our joint work are especially important at this stage. "We are ready to support the Georgian and private sectors to strengthen economic diversification and

sustainability," stated Isabelle Coleman, USAID Deputy Administrator. "I am pleased to continue our multi-year history with USAID through the strategic partnership. For almost three decades, we have jointly implemented several projects, promoted sustainable development, women empowerment, and supported several exciting initiatives in various fields. Today's transition towards the new level of partnership with USAID underscores our shared values and vision, as well as our willingness to jointly implement several important projects and initiatives in the future and contribute to the development of various areas in the country," stated Vakhtang Butskhrikidze, CEO of TBC Bank.

Ranking: European fintech startups to watch in 2022 As the European fintech booms, Sifted ranked the promising startups that we think are the ones to watch in 2022. European fintech doesn’t need much of an introduction. The three most highly valued startups in Europe — Klarna, Checkout.com and Revolut — are fintechs, and so are 35% of unicorns. The sector has grabbed an average of 22% of total European funding over the past five years, and accounted for roughly 15% of all deals in the same period. It’s no wonder fintech has been so attractive to investors — exits have been lucrative, regulators friendly and consumers and businesses can’t get enough of new digital tools. Startups have built one of the most dynamic — and relatively profitable — sectors in the ecosystem. But which companies are going to lead the way for fintech in the future? We’ve ranked the promising startups that we think are the ones to watch in 2022. Although some have speculated that fintech’s high valuations can’t last forever, especially given the downturn in public markets, the sector hasn’t shown signs of slowing down. Between 2011 and 2021,

European fintechs have raised an eye-watering total of $73.5bn — and 2021 accounted for 40% of that, 36 times the amount in 2011. Investors have already written $8bn in cheques so far in 2022, a large portion of which has gone to megarounds for existing European giants. Sixteen $100m+ rounds have already been recorded in 2022, including Checkout. com’s $1bn Series D, Qonto’s €486m Series D, Scalapay’s $497m Series B, and GoCardless’s $312m Series G. Neobanks and payment solutions (including buy now, pay later) are still sector heavyweights, but new startups are blooming and subsectors expanding, particularly those less sensitive to macroeconomic instability. Some areas within fintech that have attracted funding and interest recently are embedded finance and insurance, crypto and DeFi, and wealthtech solutions. Scrambling through regulatory hurdles, crypto and DeFi startups have won over investors with €3bn in funding last year, seven times the 2020 amount, as top talent jumps ship from the early fintechs and specialist funds set up offices across the continent. Heavy lifters from embed-

ded finance have also seen spikes in funding, as improved tech stacks and infrastructure facilitate the adoption of financial solutions outside the sector. Similarly, wealthtechs have cashed some big cheques, allowing greater access to credit and financial tools to wider user bases. Not all traditional financial hubs have picked up on new fintech trends, however. London is by far the most active hub, followed by Berlin and Paris. On the other hand Frankfurt, Madrid and Milan, homes to some of the biggest stock exchanges in Europe, are struggling to attract consistent funding. But new trends may be settling ahead. The UK’s unchallenged lead is narrowing, as other hubs and ecosystems gain ground and pour funding into the sector. Our ranking set out to discover the startups to watch across all trends and subsectors in 2022. While we prioritise younger startups, we included all relevant ones, and at least one per European country (where possible). For in-depth analysis of earlier stage companies across all sectors, visit our intelligence briefing catalogue here. Federico Scolari is data intern reporter at Sifted.

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HEADLINE NEWS & ANALYSIS 28 March, 2022 | FINCHANNEL.COM