The National Bank of Georgia (NBG) has hosted a meeting for representatives of institutions active in the financial markets, at which NBG officials delivered a presentation on access to China’s bond market.

According to the National Bank, representatives of the Ministries of Finance and Economy and Sustainable Development, as well as commercial banks, brokerage firms, asset managers, and financial infrastructure providers attended the meeting.

Discussions covered the NBG’s policy of diversifying international reserves and its approach to investing in yuan-denominated assets.

Participants also considered the growing role of the Chinese renminbi within the international monetary system, noting that the International Monetary Fund has admitted the yuan into its Special Drawing Rights (SDR) basket as the fifth currency alongside the US dollar, the euro, the Japanese yen, and the pound sterling.

Those present were taken through concrete examples of countries that have already invested in yuan-denominated instruments. Japan has placed the equivalent of USD 10 billion in Chinese assets; Australia, USD 1.9 billion; and Switzerland holds an investment quota of 15 billion yuan, representing a placement capacity of approximately USD 2.4 billion. The European Central Bank, moreover, made its first investment in Chinese securities as far back as 2017, committing an initial EUR 500 million.
This body of precedent demonstrates that investment in the Chinese renminbi and Chinese securities has become a standard and well-established diversification instrument for central banks worldwide.

The scope for operating in Chinese financial markets has expanded further still following the National Bank of Georgia’s successful accession to one of the world’s largest and most significant financial markets, the China Interbank Bond Market (CIBM).

“Gaining access to the CIBM marks an important milestone in the development of the National Bank of Georgia’s investment policy. It enables us to manage our international reserves with greater flexibility and efficiency, to broaden the range of investment instruments at our disposal, and to strengthen our risk management framework,” said Natia Turnava.

The President of the National Bank also clarified that investment in the Chinese renminbi and Chinese government securities is being pursued for diversification purposes. Non-core currencies are allocated an overall ceiling of 10 per cent of reserves, of which yuan-denominated instruments will account for approximately 5 per cent.

“It is important for Georgia that its international reserves be diversified across currencies, asset classes, and geographical exposure alike. This approach reduces concentration risk and ensures the sustainable management of reserves. The National Bank of Georgia will continue to manage its international reserves in accordance with a conservative, low-risk, and diversified investment policy, in line with best international practice,” said the NBG President.