National Bank of Georgia (NBG)

Overview

Georgia's National Bank has a historic legacy dating to May 24, 1919, when the independent Republic of Georgia established its first state bank under manager Yason Lordkipanidze. Following Soviet occupation, the contemporary National Bank of Georgia was re-established on December 25, 1991, succeeding the Georgian Republican Bank of the USSR following Georgia's independence from the Soviet Union. The legal status, functions, and powers of the Bank were codified through the Organic Law adopted in 1995.

The National Bank of Georgia serves as the integrated regulator and supervisor of Georgia's financial system, encompassing banking, securities, microfinance, and payment systems. The Bank maintains full independence from legislative and executive interference, enshrined in the Constitution of Georgia and the Organic Law on the National Bank.

Current Governor: Natia Turnava (as of 2025)

Key Leadership:

• Ekaterine Mikabadze - First Vice-Governor and Board Member

• Ekaterine Galdava - Vice-Governor and Board Member

• Nino Jeladze - Vice-Governor and Board Member

Headquarters: Tbilisi, Georgia

Status: Fully independent integrated financial supervisor with constitutional protections

Basic Identity

Classification

Inclusion Justification

What This Entity Oversees

Integrated Financial Supervision

The National Bank of Georgia serves as the single integrated regulator and supervisor of Georgia's financial system:

Banking Supervision

Supervised Entities:

• Commercial banks and banking groups

• Branches of foreign banks

• Specialized banking institutions

• Central depositories and settlement systems

• Payment system operators

Supervisory Framework:

• Capital adequacy requirements aligned with Basel III standards

• Liquidity coverage ratios and net stable funding requirements

• Asset quality and provisioning standards

• Large exposure and concentration limits

• Leverage ratio requirements

Risk-Based Supervision:

• Scheduled on-site inspections by risk assessment

• Offsite monitoring through regulatory reporting

• Stress testing requirements for systemic banks

• Recovery and resolution planning

• Cybersecurity and operational resilience standards

Prudential Standards and Requirements:

• Corporate governance and management quality assessment

• Audit and internal control requirements

• Related-party transaction restrictions

• Know-your-customer and customer due diligence

Securities and Capital Markets Supervision

Regulated Market Participants:

• Brokerage companies and investment firms

• Asset management companies and funds

• Securities registrars (independent)

• Central depositories and securities settlement systems

• Stock exchange operators

• Investment advisors

Securities Market Regulation:

• Licensing of securities firms and advisors

• Market conduct and fair dealing requirements

• Prospectus and disclosure requirements for public offerings

• Insider dealing and market manipulation prevention

• Portfolio management and custody requirements

Capital Markets Infrastructure:

• Registry and settlement system oversight

• Trade reporting and transparency requirements

• Clearing and settlement system supervision

Insurance and Non-Bank Financial Services

Insurance Regulation:

• Insurance company licensing and supervision

• Capital adequacy and reserve requirements

• Policyholder protection arrangements

• Product approval and disclosure requirements

Microfinance Supervision:

• Microfinance organization licensing and regulation

• Capital and liquidity requirements

• Consumer protection standards

• Capacity building and financial inclusion support

Other Non-Bank Entities:

• Non-bank deposit institutions

• Credit unions and cooperative lending

• Currency exchange offices

• Loan issuance entities

• Virtual asset service providers (VASPs)

The National Bank of Georgia implements comprehensive anti-money laundering and counter-terrorism financing supervision:

Supervisory Authority:

• NBG supervises obliged entities for AML/CFT compliance:

• Commercial banks and non-bank deposit institutions

• Currency exchange offices

• Microfinance organizations

• Brokerage companies and securities firms

• Loan issuance entities

• Securities registrars and investment funds

• Virtual asset service providers (VASPs)

• Micro-banks

• Payment service providers

Regulatory Framework:

• 2018 NBG Supervisory Framework on Combating Money Laundering and Terrorism Financing

• Establishes risk-oriented supervisory processes and principles

• Customer due diligence and beneficial ownership requirements

• Suspicious transaction reporting obligations

• Record-keeping and documentation standards

Dual AML Regulatory Structure:

• NBG Role: AML/CFT supervision of banking, non-bank deposits, securities, microfinance, and capital markets sectors

• Financial Monitoring Service (FMS) Role: Financial intelligence unit receiving and analyzing suspicious transaction reports; primary AML oversight coordinator

• VASP Oversight: NBG serves as licensing authority with primary VASP oversight; FMS coordinates broader FIU functions

Risk Assessment:

• National Risk Assessment for money laundering and terrorism financing

• Risk-based AML supervisory approaches

• Sector-specific risk profiles and monitoring

International Alignment:

• FATF Mutual Evaluation Report (2020)

• MONEYVAL compliance assessment

• Alignment with EU AML Directive standards

The National Bank of Georgia maintains financial system stability through:

Macroprudential Policy:

• Systemic risk identification and monitoring

• Countercyclical capital buffer implementation

• Sector-specific risk measures (real estate concentration, FX exposure)

• Policy coordination with prudential supervision

Stress Testing and Resilience:

• Regular stress testing of banking system

• Scenario analysis for systemic risks

• Capital stress scenarios and recovery planning

• Liquidity stress assessment

Banking System Monitoring:

• Consolidated supervision of banking groups

• Cross-border risk assessment

• Interconnectedness analysis

• Early warning systems for financial distress

Lender of Last Resort:

• Emergency liquidity facilities for solvent institutions

• Collateral framework for central bank lending

• Liquidity management during financial stress

• Banking system stability maintenance

Microfinance Regulation:

• Licensing and supervision of microfinance organizations

• Capital and liquidity requirements scaled for micro-institutions

• Consumer protection and transparency standards

• Financial inclusion objectives balance with prudential safety

National Bank's First Microbank License:

• Recent issuance of first microbank license reflecting regulatory evolution

• Enhanced services for underserved populations

• Integration of microfinance with banking system oversight

Financial Inclusion Initiatives:

• Expanded access to credit and savings services

• Rural banking development

• Digital financial services accessibility

• Consumer protection emphasis

Regulatory Powers

The National Bank of Georgia maintains comprehensive enforcement powers:

Sanctioning Authority:

• Fines and penalties for regulatory violations

• License restrictions or suspension

• Remedial action requirements

• Cease-and-desist authority

Supervisory Tools:

• Corrective action orders for compliance failures

• Mandatory capital injections or restructuring

• Management changes and governance interventions

• Temporary administration authority for distressed institutions

Compliance Framework:

• Regular compliance audits and inspections

• Risk-based enforcement approach

• Public disclosure of enforcement actions

Regulatory Role and Function

Legal Foundation

The National Bank of Georgia operates under comprehensive constitutional and legislative frameworks ensuring operational independence:

• Constitution of Georgia - Provides constitutional independence protections

• Organic Law of Georgia on the National Bank of Georgia (adopted 1995, as amended)

• Law of Georgia on Payment Systems and Payment Services (comprehensive framework)

• Law on Payment Services (regulation of payment service providers)

• Law on Securities Market Regulation (capital markets supervision)

• Law on Insurance (insurance sector supervision)

• Law on Microfinance Organizations (microfinance regulation)

• Law on Banks (banking regulation and supervision)

The NBG's independence is constitutionally protected against legislative or executive interference, ensuring that monetary policy and financial regulation remain insulated from political pressures. The 2018 Supervisory Framework codifies AML/CFT risk-oriented processes and supervisory principles.

Licensing and Authorization Relevance

The National Bank of Georgia (NBG) is a key licensing authority in Georgia's financial system:

The licensing process typically involves assessment of capital adequacy, fitness and propriety of management, business plan viability, AML/CFT compliance frameworks, and IT systems readiness.

Payments and Money Movement Relevance

The National Bank of Georgia implements inflation-targeting monetary policy framework:

Policy Framework:

• Inflation target of 2% ± 1.5 percentage points

• Base rate (policy rate) as primary operational tool

• Forward guidance and communication framework

Monetary Policy Mechanism:

• Standing facilities (deposit and lending facilities) for liquidity management

• Open market operations for liquidity adjustment

• Reserve requirement framework

• Lari exchange rate management within flexible framework

Economic Outlook and Policy Coordination:

• Coordination with Government on fiscal policy

• Support for sustainable economic growth within price stability mandate

• Integration of financial stability concerns into monetary policy

2025-2027 Monetary Policy Directions:

• Parliament approval of main monetary and foreign exchange policy directions annually

• 2025-2027 directions approved by Parliament with policy priorities articulated

• Supervisory strategy 2023-2025 implemented with planned updates

The National Bank of Georgia operates and regulates comprehensive payment system infrastructure:

Instant Payment System (IPS)

Purpose and Development:

• Electronic retail payment solution available 24/7/365

• Instant fund execution with immediate availability to recipients

• Launched as modern alternative to traditional clearing networks

• Payment clearing in Georgian lari (GEL)

System Features:

• Instant settlement upon payment execution

• Participant network including commercial banks and non-bank payment service providers

• Interoperability with existing payment infrastructure

• Mobile accessibility and user-friendly interfaces

International Integration:

• Built in compliance with international payment standards

• SEPA (Single Euro Payments Area) compatibility planned

• Facilitates Georgia's integration into European payment systems

• Alignment with SEPA schemes and standards

• Support for future Georgia SEPA membership

Launch Timeline:

• Implementation planned for second half of 2026

• Regulatory framework finalization underway

• Participant onboarding and testing in progress

BOG Pay Ecosystem

Bank of Georgia Payment Infrastructure:

• Commercial bank (Bank of Georgia) operates proprietary digital payment ecosystem

• Mobile and web-based payment platforms

• Integration with national payment systems

• Support for various digital payment methods

Digital Payment Services:

• Bank of Georgia mobile application

• Instant domestic transfers

• International payment capabilities

• Digital wallet services

Payment System Supervision

Regulatory Authority:

• NBG maintains licensing authority over payment system operators

• Oversight of system operators and payment service providers

• Risk management and operational resilience requirements

• Participation and access rules for financial institutions

• Fraud prevention and security standards

Cybersecurity and Resilience:

• Business continuity and disaster recovery requirements

• Data protection and encryption standards

• Cyber incident reporting and response protocols

Payment Systems Governed or Overseen

The NBG operates and/or oversees the national payment and settlement infrastructure of Georgia. Specific systems include:

Relationship to Other Regulators

International Monetary Fund (IMF):

• Member of the International Monetary Fund

• Participation in Article IV consultations

• Technical assistance cooperation on financial sector development

• FSAP (Financial Sector Assessment Program) participation

European Integration:

• Single Euro Payments Area (SEPA) integration pathway

• Harmonization with EU payment regulation standards

• European Bank Coordination Initiative participation

• EU technical assistance programs

World Bank:

• Financial Sector Assessment Program (FSAP)

• Technical assistance on supervisory frameworks

• Capacity building support

• Financial inclusion partnerships

Regional Cooperation:

• Caucasus regional central bank coordination

• CIS financial system cooperation

• Payment system regional integration

• Currency cooperation frameworks

Bilateral Relationships:

• Cooperation with major central banks

• Regulatory coordination on banking group supervision

• Cross-border payment system arrangements

Geography and Jurisdiction Notes

Important Departments and Divisions

Key Public Resources

Headquarters:

• National Bank of Georgia

• Address: Tbilisi, Georgia

• Website: https://nbg.gov.ge/en/

Governor's Office:

• Natia Turnava, Governor

• Official correspondence through main website

Regulatory Divisions:

• Banking Supervision Department

• Capital Markets and Securities Supervision

• Payment Systems Regulation

• AML/CFT Supervision

• Financial Stability Division

Public Information:

• Media and communications office

• Regulatory news and announcements

• Financial stability reports and assessments

Notes on Naming and Language