Finance expert Archil Iakobashvili has offered a cautious assessment of the National Bank of Georgia’s plan to place part of the country’s foreign exchange reserves into Chinese bonds. According to him, while diversification can help improve liquidity, Chinese debt instruments are “not particularly attractive” as investment assets due to market characteristics that differ sharply from those of major Western economies.
The National Bank announced that it has gained access to the China Interbank Bond Market and intends to invest in Chinese securities as part of its reserve diversification strategy. Bank President Natia Turnava described the move as an effort to broaden the composition of reserves.
Iakobashvili noted that although investing in foreign bonds is standard practice for central banks, China’s market has unique features that limit expected returns. Among them, he highlighted China’s currency policy, which intentionally restricts appreciation of the yuan, reducing profit potential for foreign investors. He also pointed to government influence over interest-rate formation and the dominant role of state-owned banks, which he said contrasts with markets where long-term rates are shaped by competitive forces.
Citing international data, Iakobashvili emphasized that foreign investors hold only around 3% of China’s domestic bonds—an indicator that such assets are not widely used for reserve placement. He suggested that alternative markets such as Japan, South Korea, Singapore and Australia may in some cases offer higher yields. With Georgia’s international reserves totaling about $6.3 billion, he said the final decision will depend on the regulator’s strategic asset-allocation priorities.
