Larization Measures

    Increased Access to the Long Term lari loans


    1. The commercial banks need to have sufficient liquid assets to transform short-term deposits to long-term loans. The NBG plans to increase flexibility of the transmission mechanism and widen the list of eligible collateral.
    2. In accordance with the recommendation of the International Monetary Fund, the NBG introduced the Liquidity Coverage Ratio that complies with Basel III, where the national currency was given preference.
    3. The development of capital markets requires that companies be able to issue long-term bonds and receive capital. The implementation of the strategy jointly developed by the Government of Georgia and the NBG is underway.
    4. The developed local government securities market is a prerequisite for the development of the capital market. The Government of Georgia, together with the NBG, will continue to take further steps: a) highly liquid securities (so-called "benchmark" securities) will be issued, characterized by high liquidity and predictability, where market participants will know the estimated issue calendar for the next five years. B) The institute of primary dealers will be launched, meaning that the banks participating in the primary auction of government securities will have the obligation to promote the liquidity of the secondary market for all market participants.
    5. The implementation of the pension reform is expected to improve social security and promote economic growth, as the increased demand for long-term instruments will lead to an increase in the long-term resource in lari.


    Adequate Sharing of FX Risks


    1. In order to protect borrowers from FX risks, legislative changes ensured that small loans (loans bellow 200 thousand lari from 2019) are to be issued only in the national currency.
    2. The government, together with the NBG, developed a mechanism to facilitate the conversion (to the national currency) of loans issued before January 1, 2015 as a one-time social measure for the borrowers who were most hit by the depreciation of the exchange rate.
    3. In line with IMF recommendation, in the cases of lending to the unhedged borrower, the NBG will use the macro-prudential instruments to ensure the availability of adequate buffers. 


    Pricing in Lari


    1. 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.
    2. With the support of the Government and the NBG, commercial real estate escrow services were introduced at commercial banks. This serves to avoid payment risks when paying for real estate and repossessing property, and reduce costs to both sellers and buyers. An additional incentive for real estate payments to be carrie out in lari, these services were implemented in cooperation with the Public Register and users are free in choice of using them.