EURO, USD and GEL in joint circulation?

The Georgian media has begun intensively discussing the initiative of former Minister of Economy Kakha Bendukidze, who says that the GEL should not be the only legal tender in Georgia but also the EURO and USD. Bendukidze says this will attract foreign investments into the country. However some economic analysts think that this would do much damage to Georgia’s statehood.

Bendukidze is no longer a state official but he still influences many of the economic decisions of the Government. Bendukidze bases his arguments on the protection of investors’ interests. Having the USD and EURO openly circulated in Georgia alongside the GEL will diminish the risk factor for investors because it is difficult to maintain a stable exchange rate, he says. However some Georgian experts reject Bendukidze’s initiative, saying that it would eventually weaken the national currency and damage the banking system. They add that the country would not be able to regulate its macro economic system. Nodar Khaduri says that if Georgia adopts this policy the national bank will lose its function, and it is known that Bendukidze has always sought to deprive the NBG of all its functions.

Former Minister of Economy Professor Lado Papava states that there is no country in the world with a multi currency system. This is a practice exercised only in free economic zones. He also doubts and challenges Bendukidze’s explanation that this measure would attract investors. “This system is good only for manipulations, and in this kind of chaotic environment no Western investor would come. Such an investment environment is only acceptable for investments which are unacceptable for the West,” Papava says.