The National Bank of Georgia starts to publish reformed money market index - TIBR

The National Bank of Georgia starts to publish reformed money market index - TIBR

26 July, 2018

Starting August 1st, 2018, the National Bank of Georgia (NBG) will publish reformed money market index - TIBR (Tbilisi Inter Bank Rate). Money Market Indices play a key role in the financial system, banking system and the economy. They are used for pricing different financial instruments such as: Floating Rate Bonds, Bank Loans and Derivatives. Money market interest rate benchmarks allow for better pricing transparency, risk allocation between market participants and interest rate risk management. As such, they support the development of more efficient and liquid markets and thereby a stronger and more resilient financial system.

Money market indices are widely used in the global financial system as benchmarks for a large volume and broad range of financial products and contracts. The reform of TIBR follows the global trend whereby in recent years domestic interest rate benchmarks have been undergoing fundamental reviews and reforms to improve their robustness, transparency and governance, whilst focusing on wider use of reformed overnight interest rate benchmarks (the so called ‘Risk Free Rates' or ‘RFRs') such as SONIA or EONIA.

As of today, market participants use NBG's monetary policy rate and 3 month NBG CD Rates as a benchmark to price GEL floating rate instruments. The NBG expects the reformed overnight index to support the development of both the GEL interest rate derivatives market and a new term benchmark to replace current indices as reference rates for pricing Money Market and derivative instruments in nearest future.

The reformed TIBR methodology includes index calculation and publishing rules, as well as its control mechanisms. The methodology was introduced with the assistance of European Bank for Reconstruction and Development (EBRD) and in close partnership with Market Participants.

The reformed TIBR methodology is in line with that adopted by similar RFRs. TIBR is based on actual deals, which will eventually increase its credibility. Additional benefit to the index is the fact that information gathering and calculation will be done by NBG. The index calculation methodology will also be regularly reviewed to ensure that the methodology continues to be adequate.

TIBR will be published at 9 am on the NBG web page. Methodology and historical data will be available on the National Bank of Georgia's web page Starting from 2008 NBG was publishing on its web page TIBR1 and TIBR7 indices. The calculation of those indices will end and starting from September 1, 2018 as they will be replaced by the reformed TIBR.