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The Primary Objectives and Priorities of Monetary Policy in Georgia

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  • MERAB KAKULIA
  • NIKOLOZ GIGINEISHVILI

Abstract

While price stability is the primary objective of the National Bank of Georgia, the monetary and exchange policy framework is complex, comprising three interrelated priorities: monetization, de-dollarization, and competitiveness. Shaped by the existing macroeconomic environment and structural and institutional arrangements this approach has emerged from the need to achieve and maintain long-term sustainable growth. It rests on the conventional doctrine that monetary policy cannot influence long-run trends of economic growth and employment. In a broad context it views the role of the monetary authorities in facilitating overall social and economic stability by maintaining low inflation and the purchasing power of the national currency. The effectiveness of the central bank has long been constrained by undeveloped financial markets and a lack of appropriate instruments. As of 2004, however, a whole array of new mechanisms was being introduced, which were expected to improve liquidity management practices and increase the flexibility and responsiveness of monetary policy to developments in the financial sphere.

Suggested Citation

  • Merab Kakulia & Nikoloz Gigineishvili, 2005. "The Primary Objectives and Priorities of Monetary Policy in Georgia," Problems of Economic Transition, Taylor & Francis Journals, vol. 48(4), pages 30-42.
  • Handle: RePEc:mes:prectr:v:48:y:2005:i:4:p:30-42
    DOI: 10.1080/10611991.2005.11049987
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