Last week, the Parliament of Georgia approved a new legislative package covering several key areas.

Among other things, one of the amendments establishes the legal basis for the National Bank of Georgia (NBG) to implement various pilot projects related to the digital lari, following the example of EU member states and other leading countries around the world.

Although the legislative amendments establish the legal basis for issuing the digital lari, the NBG does not plan to introduce it on a full scale in the coming years. This is explicitly stated in the explanatory note to the Organic Law of Georgia on Amendments to the Organic Law of Georgia on the National Bank of Georgia. The same law clearly defines and maintains the issuance of the lari in cash form.

The digital lari pilot project aims to explore and test new technological capabilities and assess the practical benefits that a digital currency could offer to citizens and businesses. In the longer term, this will support the innovative development of Georgia’s financial system and help prepare it for technological change.

Today, digital currencies have become a common feature of financial transactions. Digital currencies such as USDT, USDC and others are already well known to the Georgian public and participants in the financial market. However, these are privately issued digital assets pegged to foreign currencies and are widely used both in exchange trading and for cross-border transfers. By contrast, digital currencies issued by central banks are backed by the issuing central bank and therefore offer the highest level of reliability.

It is worth noting that countries are pursuing different approaches to the development of digital currencies. For example, the United States focuses on the development of private digital currencies (stablecoins), while the European Union supports the development and wider adoption of central bank digital currencies alongside private digital currencies. The National Bank of Georgia shares the latter approach.

Within the scope of its mandate, the NBG also regulates activities related to digital currencies issued by the private sector. In this regard, the framework governing the issuance and backing of stablecoins is particularly important, as it supports the safe development of financial innovation and protects consumer interests.