Independence

 

Central bank independence is a necessary prerequisite for the successful and effective implementation of monetary policy.

It is essential that the National Bank's core mandate - price stability - be independent of other government objectives, such as short-term economic growth and reducing unemployment. Otherwise, one might expect the NBG to attempt to stimulate the short-run economic growth at the expense of higher inflation. Inflation-stimulated economic growth is temporary and is usually followed by the economic downturn and even higher inflation. Such expectation reduces both long- and short-term economic growth and negatively affects employment. Hence, central bank independence is a necessary prerequisite for long-term economic stability. The independence of the National Bank of Georgia is guaranteed by the Constitution of Georgia and the Organic Law: "The National Bank of Georgia is independent in its work and representatives of the legislative and executive authorities have no right to interfere in its functioning.”

 

Transparency

 

Along with the independence of the central bank, its accountability and transparency are important. The NBG publishes annual report and presents it to the Parliament. The report summarizes the work done by the NBG in areas of monetary policy as well as supervision and all other key functions. The NBG also publishes quarterly Monetary Policy Report, which is the key communication tool of monetary policy. The report presents the NBG forecasts and an explanation of the reasons behind the monetary policy decision. Information on any monetary policy decision is published immediately in the form of a press release on the NBG website. The NBG keeps the general public informed by publishing various types of analytical reports, such as monthly reviews, analytical reports, etc.