The National Bank of Georgia has launched an invitation to fintech companies, financial institutions and technology firms to support its efforts and invest in a digital currency. Georgia's central bank wants to employ new technologies to increase the efficiency of the country's payment system.
Georgia's central bank thinks about digital GEL
The NBG is inviting companies from innovative sectors and interested financial institutions to join a public-private partnership charged with facilitating the adoption of a central bank digital currency (CBDC). The bank is considering launching the digital version of its national currency, the Georgian lari (GEL).
The digital GEL can be used to settle payments or as a store of value, the National Bank of Georgia explained in an announcement posted on its website. But what his management really hopes to achieve with the currency is "unlocking the enormous value of innovative business models for the benefit of society" and "reaching populations previously lacking banks." The bank added:
"The rise of digital technologies underscores the need to upgrade central bank money ... to better serve the digital economy and increase the efficiency of public policies."
NBG also notes that it supports a regulatory sandbox approach to digital GEL development. The bank plans to use its own Regulatory Laboratory, a framework that allows entities in the financial sector under its supervision to test innovative services and products in controlled environments in real time. The financial authority believes this will help it develop its new regulations and update the legal framework to govern the CBDC.
In its announcement, the National Bank of Georgia acknowledges the potentially disruptive nature of the technology involved in CBDCs and the need for "sound risk management during the development process".
Main features for authorized offline P2P transactions
NBG will aim to develop the digital GEL with several important characteristics. The project must be a low-cost effort given the small size of Georgia's financial market. The technology behind it must be easy to use and offer convenience to retail consumers, small and medium businesses.
Payments should be almost instant and the system will have to support "limited P2P offline transactions". The platform must be easily integrated by commercial financial institutions and fintech companies and should support the implementation of smart contracts and automatic payments.
The bank also insists that the technology must ensure the integrity of personal data and compliance with GDPR standards. At the same time it must allow the collection of statistical information without de-anonymizing personal information.
“The solution should seek an optimal balance between ensuring privacy and AML / CFT risks,” notes the NBG, noting that it should also ensure traceability of transactions in compliance with FATF standards. The supervisor wants the system to be resistant to cyber attacks and to allow limits to be imposed on transactions.
