National Bank of Georgia Adds Monetary Gold to International Reserves

National Bank of Georgia Adds Monetary Gold to International Reserves

08 April, 2024

By the decision of the NBG Board, monetary gold has been added to the NBG's international currency reserves.

In recent years, the amount of gold in the international reserves of the world's central banks has significantly increased due to two main factors: gold is considered a safe and desirable asset during economic, financial, and geopolitical challenges, and it is a good way to diversify the portfolio.

Currently, around the world, 1/8 of the total currency reserves are held in gold, and central banks own 20% of the total gold. In 2023, central banks bought a total of 1037 tons of gold, which is 28% of the total demand. Of these, the central banks of Poland and the Czech Republic accumulated the most gold in Eastern European countries. The volume of gold reserves increased by 1.3% in 2023. The USA owns 25.4% of the total gold reserves, Germany - 10.5%, and Italy and France - 7.6%.

Last year, the National Bank of Georgia purchased a record amount of USD 1.5 billion in the domestic foreign exchange market, leading to a significant increase in reserves. This allowed the NBG, for the first time in independent Georgia's history, to add monetary gold assets to the international reserves.

"We've made a historic decision for independent Georgia by adding monetary gold to our foreign exchange reserves. Our approach is to consistently bolster our international reserves as they serve as the safety cushion of our country's economy. This move signifies not just an increase but also a diversification; for the first time, our Central Bank will include gold in our international reserves as a secure and enduring asset," remarked Natia Turnava.

In accordance with the decision of the NBG Board on March 1, 2024, the National Bank of Georgia purchased 7 tons of the highest quality (999.9) monetary gold. The purchase, worth 500 million US dollars, was made in the form of bars of international standards in the London gold bar market and is currently stored in London. As of today, the volume of purchased gold amounts to approximately 11% of the NBG's international reserves.