The deadline for the implementation of the first stage of the "Digital GEL" project will end on February 15, respectively, the deadline also expires for fintech companies interested in cooperation with the National Bank of Georgia, according to a statement on the regulator's website.

In order to promote the use of new financial technologies, improve the efficiency of the payment system and expand access to financial services, the National Bank of Georgia has been actively exploring the characteristics of the Central Bank's digital currency (CBDC) since 2020, including the possibilities of the digital GEL, the system's structure and ways of using it in the market.

"After the completion of the first stage, the National Bank will select a company providing digital currency technology of the Central Bank and will carefully evaluate its system device and other additional information provided by techno partners, including a system device for the introduction of a trial version of the digital GEL", the message says.

The National Bank of Georgia announced the start of the first stage of the digital GEL project on April 30, 2021 and invited interested suppliers of financial technologies to cooperate. During this period, cooperation with international and local fintech companies and interested financial institutions was actively underway.

Within the framework of this cooperation, the regulator has studied various ways and methods of solving technological, supervisory and financial difficulties through the Central Bank's digital currency system (CBDC).

CBDC is an obligation of the Central Bank and will have the status of a means of payment.

According to the regulator, the digital GEL can have a significant impact on the country's existing monetary policy and payment system, contribute to the development of financial technologies and the emergence of new innovative financial products and services.

"At the same time, it is important to assess the risks associated with the introduction of digital GEL. With the involvement of partner companies, the National Bank of Georgia will conduct practical testing of the trial version of the Central Bank's digital currency in a pilot mode in order to reduce risks", the message reads.

What's New in Digital Currency

Currently, the central banks of the countries issue two types of money: cash (available to everyone) and "money for banks" – reserve accounts of commercial banks in the central bank (available only to banks). This money is the obligations of the Central Bank. The rest of the money in the economy is produced by the banking sector through loans, and non-cash funds of citizens and companies in bank accounts are obligations of commercial banks.

The central bank's digital money can also be of two types: retail (retail) – a digital analogue of cash available to a wide range of users, including citizens and legal entities, and wholesale (wholesale) – a digital analogue of "money for banks", to which only financial organizations have access.

Retail CBDCs could be called "reserve accounts for everyone," and their key innovation is to expand access to Central Bank liabilities.

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