National Bank of Georgia won nomination for Risk Manager Award of 2020 by prestigious international publication Central Banking. Every year this award is presented to leading central banks that demonstrate excellence in Risk Management of FX reserves.

It is the second time National Bank of Georgia was recognized by Central Banking publication. On March 17^th NBG received Transparency Award from Central Banking to recognize exceptional steps taken by the bank recently to improve its transparency and communication.

Selection Committee based its decision on crucial reforms implemented by National Bank of Georgia in FX reserve management field over last decade and also took into consideration quick and effective response of NBG to the Covid-19 crisis that affected domestic and international economies and financial markets.

Central Banking awards in FX reserve management have previously been awarded to central banks of Brazil, Mexico, Switzerland, Israel, South Korea and National Bank of Georgia is delightful to join their ranks.

Global recognition of NBG's achievements in FX reserve management field is a result of dramatic transformation of its reserves management function over the last decade. From a central bank with small reserves and simple instruments, NBG has evolved into skillful reserve manager with sophisticated investment strategies and top-notch infrastructure.

Strategic partnership with WB treasury RAMP program was relied upon to support continuous capacity building. RAMP guidance was instrumental in designing and implementing leading reserve management practices, creating long term vision and reorganizing reserves management function.

New investment guidelines were created and implemented gradually, supporting transition from passive to active portfolio management. Custom in-house benchmarks allowed NBG flexibility in defining risk return profile of reserves. To better cater its liquidity needs trenching approach was adopted and rebalancing rules brought discipline to cash flow management.

Initial breakthrough was achieved by implementing world class treasury and risk management system in 2011. It allowed central bank to build a solid ground for farther transformation by drastically expanding investment universe, introducing new risk and performance metrics, reducing operational risks by process automation. To ensure business continuity NBG has implemented infrastructure to fully support its reserves management operations from remote locations. This proved life-saving when in response to COVID-19 pandemics entire reserves management team quickly moved to remote work, without limiting scope of its activities.

Accumulation and management of FX reserves is one of the most important functions of central banks. During times of market shock, FX reserves provide crucial support for domestic economy and financial sector. The crisis scenario materialized in 2020, when global Covid-19 pandemic caused lockdowns that effectively shut down large swaths of global and domestic economy while triggering turmoil on financial markets.

When Covid-19 induced crisis unfolded, National Bank of Georgia swept into action in a bid to save Georgian economy and made a decision to spend reserves, while using bi and multilateral instruments to maintain reserves on an adequate level. NBG negotiated program extension with IMF, signed bilateral swap agreement with IBRD and entered into repo agreement with European Central Bank. NBG swiftly intervened in FX markets to support domestic currency using traditional and unconventional instruments while at the same time arranged supply of foreign currency banknotes to alleviate cash deficit experienced by domestic banks due to inability to import cash caused by suspension of regular flights.

NBG prudently managed its reserves, prioritizing safety and liquidity over return, thus investing vast majority of funds in highly liquid financial instruments carrying little credit risk. This proved to be the key to successful execution of emergency measures by NBG and was mentioned among significant factors considered by judges of the selection committee.

Central Banking Publications was established in 1990 in London. Central Banking is an independent financial media portal and publisher with broad audience of central banks, market regulators and other financial sectors.

Risk Manager Award will be presented to National Bank of Georgia at Central Banking's virtual ceremony taking place at Summer Meeting virtual event held in June 2021.

Source: https://www.centralbanking.com/awards/7807081/risk-manager-national-bank-of-georgia