The Central Bank of Montenegro (CBCG) has announced that it has signed an agreement with Ripple to develop a strategy and pilot programme for the country’s first digital currency.
It will take the form of a Central Bank Digital Currency (CBDC) or national stable coin. The move comes as the European Central Bank continues to develop the Digital euro concept as a means of electronic payment in the euro area.
The number of countries exploring a CBDC has more than trebled in the last three years. In May 2020, only 35 countries were considering a CBDC. That has since risen to 114 countries, representing over 95 percent of global GDP, of which 60 countries are in an advanced phase of exploration such as the development, pilot, or launch phase. In a statement, CBCG Governor Radoje Žugić said:
“We look forward to collaborating with Ripple on the pilot project for creating CBDC or stablecoin. Through the project, the CBCG will work with the Government of Montenegro and Montenegro’s academia to create a practical digital currency or secure currency solution to test the main blockchain technology’s functionality and potential. It will also analyse the advantages and risks that CBDCs or national stablecoins could pose concerning electronic means of payment availability, security, efficiency, compliance with regulations, and most importantly, the protection of end users’ rights and privacy.”
The project will go through several stages, including identifying the practical application of a digital currency or national stablecoin as well as simulating its circulation and use under controlled conditions. Montenegro is one of over 20 countries that intend to continue or begin pilot testing in 2023. Others include Australia, Thailand, Brazil, India, South Korea, UAE, Russia and China.
“The Central Bank of Montenegro is bringing the next level of digital transformation to its financial infrastructure and addressing some of the world’s biggest financial challenges including financial inclusion.” James Wallis, Ripple’s Vice President of Central Bank Engagements & CBDCs, added.
