Dollar and Euro: The Preferred Deposit Currencies in Georgia

According to data from the National Bank of Georgia as of January 2025, the majority of bank deposits in Georgia continue to be held in US dollars and euros. Deposits in foreign currencies totaled approximately 32.8 billion GEL, with the US dollar and euro clearly dominating the scene. Specifically, dollar deposits amounted to around 26 billion GEL, and euros accounted for 6.3 billion GEL. Other currencies, including the British pound at 253 million GEL, Russian ruble at 55 million GEL, Swiss francs also at 55 million, and various other currencies totaling 59 million GEL, make up a relatively minor portion of deposits.

Significantly, deposits denominated in dollars and euros grew substantially over the past year, with USD deposits alone increasing by 25%. Such trends demonstrate a high level of trust in these international currencies, primarily driven by their perceived stability compared to the local currency.

Another noteworthy fact is that nearly half of these deposits are current accounts, meaning customers can access their funds at any time without restrictions. This is in contrast to term deposits, which require the money to remain in the account for a specified period and usually offer higher interest rates. The popularity of current deposits indicates that consumers prefer liquidity and flexibility, even though it comes with potentially lower returns.

For a developing economy like Georgia, characterized by volatility in the national currency (Georgian Lari) and relatively high inflation rates, such behavior makes practical sense. It is logical that people seek safety and stability through internationally recognized and stable currencies, primarily the US dollar and euro. However, this practice also presents certain risks. Heavy reliance on foreign currency can exacerbate the economy’s vulnerability to fluctuations in exchange rates and complicate the central bank’s ability to effectively manage monetary policy.

Moreover, Georgia’s growing economic integration with Western countries, particularly with the European Union, further supports the demand for deposits in stable foreign currencies. Still, experts argue that over-reliance on foreign currency deposits might undermine the effectiveness of monetary policy and financial stability. Therefore, encouraging more balanced deposit practices and enhancing trust in the Georgian Lari remain key challenges for policymakers.