Monetary Policy Instruments

    The short-term money market interest rate is the operational target for the Monetary Policy Committee of the National Bank of Georgia, and that must be achieved in order to maintain price stability. To achieve the operating target, the NBG uses an operating framework consisting of monetary policy instruments and procedures. The operational target determines how the available instruments can achieve the desired interest rate in the money market. This can be achieved by the NBG effectively managing the short-term liquidity of the banking sector. In the short run, large fluctuations are inherent to bank liquidity demand. To prevent the escalation into interest rate fluctuations, short-term supply and demand for liquidity must match. The NBG has both liquidity supply and liquidity absorption instruments. Refinancing loans is the key liquidity supply instrument. The NBG uses refinancing loans to deliver to the market the level of liquidity adequate to the market demand for a given interest rate. Refinancing loans are issued in exchange for appropriate collateral (government securities, etc.). These are the liquid assets of the banks that invested in their liquid assets in previous periods and now use these assets to obtain liquidity when needed.


    The NBG operating framework consists of the following instruments: refinancing loans, one-month open market operations, certificates of deposit auctions, treasury bond auctions, overnight loans and overnight deposits, minimum reserve requirements and other instruments.

    The rates of the monetary policy instruments



    In force from March 13, 2023 Maturity Rate (%)
    Refinancing loan 7 days  To be defined by auction (minimum 8.25 % )
    One month open market operation 28 days To be defined by auction (minimum 8.25 % )
    Overnight deposits 1 day    (8.25 -1.75) %
    Overnight loans 1 day  (8.25+0.75) %
    Certificates of deposit 3 months Defined by auction
    Treasury securities 1/2/5/10 years Defined by auction



      Liabilities in National Currency Liabilities in Foreign Currency
    Reserve requirements* 5.0% 10%-20%


    * Liabilities in national currency with the remaining maturity over 1 year and liabilities in foreign currency over 2 years are exempt from reserve requirements. For funds in foreign currency with remaining maturity 1-2 years, reserve requirement amounts to 10%-15%.