October 17, the National Bank’s decision
to reduce the minimum reserve requirements
set for loans in foreign currency from 30% to 25% enters into force.
According to the regulator, this will allow commercial banks to increase lending in foreign currency by $ 700 million and reduce interest rates on the loans.
The decision was caused by the lari’s devaluation and its impact on the inflation rate.
“The recent devaluation of the national currency has had a negative impact on inflation. Given that the central bank’s main function is to control inflation, the regulator though it necessary to take a number of measures, ” President of the National Bank of Georgia Koba Gvenetadze says.
He speaks about the currency interventions in the market which contained the lari’s depreciation and reduced inflationary pressures.
The next step was to reduce the minimum reserve requirements for loans in foreign currency.
“This will make loans in foreign currency more accessible and will meet the demand. This step will boost the national currency’s stabilization and reduce inflation,” NBG President points out.