Georgia is laying the groundwork for a digital version of its national currency, with parliament approving a legal framework and the central bank preparing pilot projects. But a nationwide launch remains years away.
The National Bank of Georgia (NBG) is examining how a digital lari could work alongside existing forms of money, while exploring tokenisation, stable coins and upgrades to the country's payment infrastructure, NBG Governor Natia Turnava said at the Tbilisi Financial Summit.
The initiatives reflect Georgia's ambition to become a regional financial technology hub, although the digital lari is still being researched and tested.
“We are currently piloting projects related to the digital Lari and, in collaboration with relevant government agencies, are exploring ways to foster tokenisation,” Turnava said, adding that the central bank aims to position Georgia as a hub for new financial technologies.
The NBG is also upgrading its real-time settlement infrastructure, with support from international partners, including the World Bank.
A digital lari would be an electronic form of Georgia's national currency, issued and backed by the central bank. Unlike commercial bank deposits or privately issued cryptocurrencies, it would be a direct liability of the NBG, retaining the same nominal value as the traditional lari.
It would fall into the category of central bank digital currencies (CBDCs), which countries around the world are increasingly researching and testing as digital payments expand.
Unlike cryptocurrencies, whose values can fluctuate sharply, the digital lari would be tied to Georgia's national currency. The central bank would determine how it is designed, distributed and used.
However, the NBG says its research is focused on whether the technology would benefit Georgia, rather than preparing for an immediate nationwide launch.
Davit Utiashvili, head of the NBG's Financial Stability Department, said on 21 October that pilot projects would assess the currency's potential benefits, costs and technological challenges, as well as possible risks and ways to address them.
He said central bank digital currencies could play an increasingly important role in the financial system as technology evolves.
Georgia's parliament has taken a significant step towards a digital lari, fast-tracking amendments to the Organic Law on the National Bank of Georgia.
The legislation gives the NBG exclusive authority to issue the digital currency, which would remain an unconditional liability of the central bank and retain its nominal value.
It also places the central bank in charge of managing cash and digital currency supplies and setting issuance plans.
Crucially, the amendments prohibit the issuance of digital lari specifically to finance a state budget deficit.
While the legislation opens the door to a future digital currency, it does not commit Georgia to launching one. The NBG has made clear that a nationwide rollout is not expected in the coming years.
The prospect of a digital lari has raised concerns within Georgia's banking sector, particularly over its potential impact on liquidity and how much digital currency individuals and businesses should be allowed to hold.
Alexander Dzneladze, president of the Banking Association of Georgia, urged caution, citing regulatory uncertainties and ongoing debates over central bank digital currencies in the European Union.
A major concern is the possibility of customers transferring large amounts of money from commercial bank accounts into digital lari.
If the central bank's digital currency became an attractive alternative to traditional deposits, such transfers could put pressure on banks' liquidity and limit their ability to lend. Caps on individual and business holdings could therefore prove essential.
Dzneladze said the challenges went beyond cybersecurity, extending to broader questions about managing the money supply.
“For now, we are evaluating this issue, and to be honest, we are approaching it with a bit more caution,” he said.
Despite the banking sector's concerns, fintech representatives see potential economic advantages.
Davit Kikvidze, head of the Fintech Association, said a digital lari could strengthen the National Bank's ability to implement monetary policy and help its decisions take effect more quickly across the economy.
He suggested the technology could improve the central bank's response to inflation by shortening the time between policy decisions and their impact on economic activity.
Kikvidze also highlighted opportunities to make payments more flexible, improve access to funds and modernise financial services, potentially supporting wider economic growth.
Yet much would depend on the currency's design, public adoption and its ability to operate without destabilising the banking system.
Those are among the questions Georgia's pilot projects aim to answer.
With the legal framework now in place, Georgia has moved a step closer to a possible digital lari. But the decision to launch one will depend on whether testing shows that its economic benefits outweigh the risks.
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