Montenegro, although outside the European Union, uses the euro as its national currency. However, this choice could soon change thanks to an agreement signed with Ripple. The blockchain company will work together with the Montenegrin central bank to develop a national digital currency in the form of CBDC or stablecoin. This initiative could thus enable the country to strengthen its monetary independence and facilitate access to financial services for all its citizens.
Ripple and Montenegrin Central Bank Join Forces for CBDC Pilot
Since 2002, Montenegro has adopted the euro as its de facto currency, although it is not part of the euro zone. However, the country now seems to want to take its monetary independence!
Indeed, the central bank of Montenegro announced this Tuesday worked in collaboration with the company Ripple. They intend to develop a digital currency pilot project in the form of a CBDC or a national stablecoin.
Additionally, blockchain provider Ripple has precise that this pilot project will allow the Montenegrin central bank to test the functionality and potential of blockchain technology.
Additionally, the central bank will work closely with the academic community to assess the potential benefits and risks of CBDCs or domestic stablecoins in different areas, such as:
- The availability of electronic means of payment,
- Transaction security,
- Compliance with the regulations in force,
- Protection of user rights and privacy.
The Ripple company considers this agreement as a new step forward for the country, in favor of the “ digitization of financial services and the promotion of a more financially accessible world for citizens “.
However, to make this project a reality, it will have to go through several stages. This will include in particular:
- Identify the concrete application cases of a digital currency or a national stablecoin,
- Design a model to simulate the circulation and use of digital currency under controlled conditions, in order to analyze its impact on the economy and the lives of citizens.
CBDC project in Montenegro: a long-time planning!
Montenegrin Prime Minister Dritan Abazovic had already announced the deal between Ripple and the Central Bank in a tweet posted during the World Economic Forum in Davos earlier this year. Thus, the project, which begins this month, has been planned for several months now.
“We will work closely with the Central Bank to determine use cases, key success factors and timelines. ” To declared RippleX Vice President James Wallis.
Currently, several states have accelerated their race towards the creation of a central bank digital currency (CBDC). China took the lead with the launch of the digital yuan in 2020, followed by other countries such as Japan, Sweden and England which announced pilot projects.
In the United States, Texas regulators recently proposed legislation in favor of central bank issuance of a gold-backed CBDC. The race for the CBDC is well and truly on and Montenegro is no exception.
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