Montenegro’s central bank announced today that it has signed an agreement with Ripple to develop a strategy and pilot program for a national stablecoin or central bank digital currency (CBDC).
Central Bank of Montenegro to analyze benefits and risks of CBDCs
It is essential to know that the exact nature of the potential future of CBDC is not yet known, however, as Montenegro has no national currency of its own. The country has been using the euro since 2002, despite not being part of the Eurozone.
Ripple’s Vice President for Central Bank Engagements and CBDCs, James Wallis, said that the project would go through several stages, including identifying practical applications of the digital currency and a sandbox stage to put the future digital currency into circulation under controlled conditions. The project will begin this month, he added.
The Central Bank of Montenegro Governor Radoje Žugić said in a statement that the central bank would work with the government and academic community to analyze the advantages and risks of CBDCs or national stablecoins in terms of electronic means of payment, security, efficiency, compliance with regulations, and the protection of end-users rights and privacy.
He added that as a central bank committed to modern national banking trends, the Central Bank of Montenegro is actively ensuring it maintains an efficient financial system.
Ripple has been expanding in the CBDC space, and Wallis said that the company has multiple CBDC projects ongoing around the world and is in dialogue with dozens of central banks globally. Montenegrin Prime Minister Dritan Abazovic first disclosed the upcoming deal between Ripple and the Montenegrin Central Bank in a tweet from the World Economic Forum in Davos in January. More details about the project will be revealed later in the year.
The Montenegrin government has been making moves to become a part of the cryptocurrency industry for some time. It is seen as being open to crypto and recently hosted an event called Future Now! in April last year which was attended by Ethereum co-founder Vitalik Buterin. Reportedly, Buterin was given Montenegrin citizenship during this visit.
