What is "larization"

Larization is de- dollarization for Georgian currency – Lari. The term may have two meanings:

1. Larization - percentage share of Lari in all currency usage. For example: loans ( deposits) larization - percentage share of loans (deposits) disbursed (received) in Lari, in total amount of loans (deposits) disbursed (received) by commercial banks. Larization of economy - percentage share of Lari in total money supply of economy.
2. Larization - a process when percentage of larization is increasing. This process may be triggered by Economic agents in a country who prefer national currency to foreign currency for transactions. They prefer to keep (of their own free will) their savings in national currency instead of foreign currency and also take loans (of their own free will) in national currency instead of foreign currency. They set prices on goods (including durable consumption goods: flat, car, etc.) in national currency instead of foreign currency.

Larization is important for ensuring stable economic environment, as in this case country currency risks decrease and accordingly, external shocks will have less influence on economy. Under the condition of increased larization, monetary policy of National Bank becomes more effective which is necessary precondition for economic stability. Therefore, one of the primary tasks for National Bank is to increase larization. In addition, it is important to let larization increase naturally without any administrative measures.

Category:Foreign exchange market Category:Monetary policy Category:Economy of Georgia (country)