The National Bank of Georgia (NBG) says easing reserve requirements on foreign-currency certificates of deposit will help commercial banks secure more stable funding and reduce reliance on short-term resources.
The regulator explained the change in response to questions from BMG after amending the rules for calculating minimum reserve requirements last week.
According to the NBG, certificates of deposit provide a more stable source of funding during periods of stress because they cannot be withdrawn before maturity. Encouraging their use should increase the share of longer-term funding in banks’ balance sheets and strengthen the resilience of the banking sector and the country’s international reserves.
Under an order issued by NBG President Natia Turnava on October 20, banks will count 50% of the amount of their foreign-currency-denominated certificates of deposit when calculating minimum reserve requirements.
Banks will begin calculating their requirements under the new rules on November 3, 2026, and must comply with the resulting reserve obligations from December 3.
Minimum reserve requirements determine how much money commercial banks must hold in reserve at the central bank. For foreign-currency funding, the required reserve ratio depends on the dollarization of a bank’s deposits: the higher the dollarization rate, the higher the requirement.
Under the existing rules, banks with deposit dollarization of 70% or more must maintain a 20% reserve ratio on foreign-currency funds. The ratio is 10% for banks with dollarization of 40% or less, with a proportional rate applying between 40% and 70%.
The NBG’s order does not specify the impact on individual banks’ reserve obligations. The effect will depend, among other factors, on the volume of foreign-currency certificates of deposit issued by each bank.
