The National Bank of Georgia (NBG) says that by easing reserve requirements for commercial banks, around $250 million worth of liquidity will be released into the banking sector.
According to the Head of the Financial Stability Department, Davit Utiashvili, the decision was driven by expectations of tighter global financial conditions, which could make foreign currency loans in Georgia more expensive. The measure is intended to soften this impact by increasing the availability of foreign currency resources in the banking system.
Utiashvili noted that the reduction in reserve requirements will have a positive effect both on banking sector profitability and on lending to small and medium-sized enterprises (SMEs). He explained that access to foreign currency credit for SMEs is expected to improve as a result.
“We made this change at the end of 2024 when we saw temporary market volatility and risks of exchange rate depreciation. At that time, there were concerns about excess foreign currency liquidity in the market, which could have been redirected into lending to the real economy. That is why the measure was introduced as a temporary tool,” Utiashvili said.
He added that those risks are no longer relevant today, as the foreign exchange market has stabilized and the NBG is now purchasing foreign currency through interventions, contributing to reserve accumulation.
“We are releasing around $250 million in equivalent liquidity for the banking sector, which will positively affect bank revenues and SME lending in foreign currency, making credit more accessible,” he said.
Utiashvili also emphasized that the decision reflects the changing global environment, where inflationary pressures remain elevated and central banks in major currencies such as the US dollar and Euro may tighten monetary policy further. The NBG’s move, he said, is aimed at preventing excessive transmission of these global pressures into the Georgian economy.
