The National Bank of Georgia (NBG) has reduced minimum reserve requirements on foreign currency deposits for commercial banks by 5 percentage points, according to a decision made by its Financial Stability Committee on May 6.
The regulator said the move restores the reserve requirement to its previous level after it was temporarily increased in December 2024. The policy requires banks to keep a portion of customer deposits placed at the central bank, with the rate depending on the level of dollarization — the higher the share of FX deposits, the higher the reserve requirement.
Under the previous framework, reserve ratios ranged from 10% to 25%, depending on banks’ dollarization levels, with a linear formula applied for mid-range cases. The latest change effectively reduces all applicable rates by 5 percentage points.
In practical terms, this means banks will now be required to hold less foreign currency liquidity at the central bank and will have more funds available for lending activity.
As of March 2026, commercial banks held around $2 billion in FX reserves at the NBG. With the average reserve requirement expected to fall from 16.5% to around 11.5%, the banking sector could free up approximately $600 million in additional lending capacity.
The National Bank has previously used reserve requirements as a tool to manage dollarization and encourage lending in the local currency.
