Economist and former National Bank of Georgia (NBG) president Roman Gotsiridze believes that the recent move to transfer part of Georgia’s foreign exchange reserves into Chinese assets is part of a broader strategy to distance the country from the West.
“The National Bank is moving a portion of its reserves to China. According to the NBG, this is allowed under an agreement with the People’s Bank of China. The Bank says this step will help diversify reserves and hedge risks. But what this really means is following Russia’s playbook. Russia moved all its reserves into gold and Chinese yuan after Western assets were frozen. The West won’t allow or want reserves placed there,” Gotsiridze said.
He added, “Every step taken by the Georgian government in recent years mirrors Russian policies. The desire to move reserves to China is part of a plan to further distance Georgia from the West.”
On February 12, the NBG announced that it had gained access to the China Interbank Bond Market (CIBM). This access allows the bank to purchase Chinese bonds and allocate part of its reserves into Chinese assets. NBG President Natia Turnava stated that investing in the Chinese market will help diversify Georgia’s foreign currency reserves by currency, asset type, and geographic area.
“Diversification of reserves is important for us, across currencies, asset types, and geographic regions. In the near future, we will begin investing, further improving reserve management. Gradually, we will explore new markets based on risk assessment and market conditions,” Turnava said. She added that the NBG plans to share its experience with the private and financial sectors to encourage participation in the Chinese bond market.
Until now, Georgia’s reserves have not been invested in Chinese assets. The bulk of the $6.3 billion in reserves is held in US dollar-denominated instruments, with additional allocations in gold, euros, SDRs, and Canadian dollar-denominated securities.
