Larization Measures

     

    Increased Access to the Long Term Lari Loans

     

    1. The commercial banks need enough liquid assets to transform short term deposits to long term loans. NBG will increase flexibility of the transmission mechanism and widen the list of eligible collateral.


    2. According to IMF recommendation, NBG has introduced the Liquidity Coverage Ratio under Basel III with the national currency treated preferentially.


    3. To develop capital markets, the companies shall be able to issue long term bonds and raise capital. Together with the NBG, the government has elaborated a common strategy and that is being jointly implemented.


    4. A developed local government securities market is a necessary precondition for the development of the capital market. The government, along with the support of NBG will continue to move in this direction. Namely, we will: a) issue so-called "benchmark" bonds, the main characteristics of which are predictability and high liquidity. 


    5. The Implementation of Pension Reform will improve the social security provision and contribute to the economic growth by increasing the demand for long-term instruments. This ultimately ensures the growth of the long-term lari resource.


     
    Adequate Sharing of FX Risks

     

    6. In order to hedge the borrowers against FX risks,  according to amendments in legislation small size loans (loans below 200 thousand lari from 2019) are to be issued only in local currency.

    7. The GOG along with NBG implemented a safe service for real estate transactions (so-called "escrow" account service), which aims at avoiding risks and reducing cost of real estate transactions both for the sellers and buyers. The service has been implemented in cooperation with the public registry and is optional for the consumers. This service is an additional stimulus for the settlement of real estate operations in lari.


    8. In line with IMF recommendation, in the cases of lending to the unhedged borrower, NBG will use the macro-prudential instruments to ensure the availability of adequate buffers.
     


    Pricing in lari

     


    9. Amendments are being prepared in The Organic Law on the National Bank of Georgia, according to which pricing of every goods and services for legal entities is mandatory only in lari. This amendment entered into force from July 1, 2017. 



    10. The GOG along with NBG, implemented safe service for real estate transactions (so called "escrow" account service), which aims at avoiding risks and reducing cost of real estate transactions both for the sellers and buyers. The service implemented in cooperation with public registry and is optional for the consumers. This service is an additional stimulus for the settlement of real estate operations in lari.