Georgia's National Bank introduces new instrument of money-loan policy
Georgia, Tbilisi, June 3 / Trend N. Kirtskhalia /
National bank of Georgia made another action towards development of money market and decided to launch new instrument of money-loan policy - currency swap from June 3, the National Bank said.
Introduction of new instrument will draw additional foreign capital in the country, assist banks to increase loan portfolio in national currency, reduce currency risk of creditors and accelerate process of actions to avoid operations with other currencies.
Currency swap is combination of two loans in two different currencies. National bank of Georgia will grant loans to local banks in national currency via currency swaps but will get foreign currency. During swap-calculations National bank will get U.S dollars and give equivalent loan in lari upon current market tariffs to be determined in auction. National bank will return dollars and get equivalent sum in lari plus percent in the day of contract swap discharge.
Cost of currency swap will determine current market rate given percent rates in foreign and national currencies. Currency swaps will be urgent - per year. So, banks will be able to use resources bought in auction in national currency to increase loan portfolio.
So, they will get an opportunity to meet increased demand for national currency. So, creditors will not face currency risk. Moreover, agency for financial control will change provisions of open position for banks to use swap-operations in the inter-bank market for risk insurance.
Certain number of bank loans denominated in foreign currency will replace denominated loans in national currency as a result of swap launching. Several banks will be able to draw additional resources from abroad.
National bank of Georgia will conduct currency auctions of swaps once per week - every Wednesday. Like currency auctions commercial banks will make bids via trade system of Blumberg. Auction will be held by set of prices method. National bank of Georgia will not limit percent rate. So, market will determine percent rate.
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