ISET Policy Institute's announcement
Thursday, 21 September, 2023

We would like to address the recent alarming developments at the National Bank of Georgia (NBG). Throughout the past decades, the NBG has firmly upheld its institutional and political independence, adhered to international standards and obligations, demonstrated exceptional professionalism in guiding the country's monetary policy, and maintained financial and macroeconomic stability. The policies and decisions formulated by the NBG hold paramount importance for the well-being of the country, its population, and its international reputation.

Changes introduced in the procedure of implementation of international sanctions by the National Bank impose a threat to the macroeconomic stability in the country and to its international reputation outside the country. First, applied changes to the rules for the implementation of sanctions for Georgian citizens raise concerns about the independence of the bank's decisions from political influences. Second, it led to the resignation of the bank's top-ranking professionals and decision-makers, namely all three vice-governors and the advisor resigned, based on disagreement with the subject decision. This creates an unprecedented institutional crisis and undermines both the bank's internal professional capacity as well as its reputation. Third, the NBG decision gives power in the application of sanctions to the judicial sector, the independence of which has been internationally questioned and it is a precondition for Georgia receiving the EU candidate status. Fourth, this change caused concerns in the commercial banking sector and already negatively affected the exchange rate of GEL.

We hope that the National Bank will reconsider its decision and implement international sanctions in full accordance with international obligations. We advise the bank to urgently address the crisis of internal professional resources and take measures to prevent damage to both its own and the country's international reputation.