The Next Instrument in the International Reserves Management Process
29 March, 2013
One more financial instrument, Futures, has been launched by the National Bank of Georgia in the international reserves management process. The process has begun since March. The World Bank mission visited the National Bank for the purpose of observing this project.
Futures contract is an agreement between two parties to buy or sell a standardized asset at specified time in future, at the price agreed today. Futures give the central bank an increased opportunity to effectively and profitably manage international reserves portfolio and, at the same time, hedge interest rate risks. The most common Futures contracts are interest rate futures and bond futures, which are traded on Chicago Mercantile Exchange, the biggest market for US Dollar denominated financial contracts.
The recent years of cooperation with the World Bank allowed the expanding of the list of financial instruments used by the National Bank of Georgia in the process of international reserves management. Since 2009 to present in consequence of cooperation with the World Bank the NBG has implemented several important projects. World Bank assisted NBG in implementing international portfolio management system. The process of strategic distribution of international reserves management has begun and the international reserves management practice has been improved.
NBG continues cooperation with the World Bank and plans the implementation of other important projects.
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