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The announcement comes from the prime minister of Montenegro, his nation is collaborating with Ripple (XRP) to develop a Central Bank CBDC.
Dritan Abazovic made the announcement via Twitter, Montenegro has kicked off the project for its own stablecoin. The collaboration originated in a meeting in Switzerland, where the Prime Minister of Montenegro met with Ripple CEO Brad Garlinghouse and Vice President James Wallis.
Produktivan sastanak sa CEO kompanije @Ripple @bgarlinghouse i VP za saradnju sa centralnim bankama #JamesWallis. Razgovarali smo o razvoju platne infrastrukture koja bi obezbijedila veću finansijsku dostupnost i inkluziju. Crna Gora otvorena za novu vrijednost i ulaganja. pic.twitter.com/YdPeWHUtCm
— Dr Dritan Abazovic (@DritanAbazovic) January 18, 2023
Ripple (XRP) will help Montenegro in the project
Montenegro is one of the countries vying to become an EU member, the application has yet to be approved. While not yet a member, the country uses the Euro as its state currency. The EU currency is not for all intents and purposes the state currency, but despite this, it is treated as such by the government.
The project in collaboration with Ripple to create a stablecoin directly from the Central Bank may provide interesting developments on the Euro affair.
Montenegro has been waiting for acceptance as a member of the European Union since 2008 now. The Balkan country has also been using the Euro since 2002, more than twenty years now. The new project formalized by the prime minister, of the creation of the CBDC, together with Ripple, could fill the gap of a national currency to call its own. Ergo, a potential symbolic identity to the nation.
This is not the first time Montenegro has opened up to the blockchain and cryptocurrency universe.
Back in April last year, Vitalik Buterin, the co-founder of Ethereum, attended an event focused on the crypto world in Montenegro and was subsequently granted Montenegrin citizenship.
Montenegro seems really taken with the project, but especially with the idea of a banking innovation for the country.
Ivan Boskovic, the former director of the Department of Payment Systems and Financial Technology at the Central Bank of Montenegro, has published several articles about it.
One of the latest articles is precisely about the possible banking innovation that Montenegro may have over the next few months, with the title, “Central Bank of Montenegro: How to Drive Banking and Payment Innovations in a Small Developing Economy.”
Growth in the financial sector, according to Ivan Boskovic, is synonymous with long-term growth for the country as a whole. Developing economies like Montenegro, can benefit a lot from these kinds of innovations.
Obviously, both the economic and risk commitment is greater than in large world economies, the obstacles to overcome are far greater. But the results they could bring to a nation, such as Montenegro for example, are many indeed.
For its part, the Ripple company over the years has specialized a great deal in terms of creating CBDCs. In 2021 in fact, it created a private ledger for central banks to be able to test their stablecoins.
Many nations have plans to digitize their currency
Although Montenegro’s project is aimed precisely at creating its own monetary identity, the plan to create a digital currency directly from the Central Bank does not belong only to the Balkan nation.
There are many states that are considering, or even implementing, the idea of a CBDC.
A report by the Bank of International Settlement (BIS), showed that about 80% of banks around the world are planning to create their own digital currency.
But not only that, the same report highlighted that 40% of nations around the world are already in the experimental stage.
Among the various projects, one of the most ambitious is that of the Japanese Central Bank (BoJ), which has already announced its plan for experimentation, which will begin this spring and will involve consumers and private sector companies.
Also worth mentioning is the already initiated project of Turkey, which in early January carried out the first tests of its Digital Lira.
The first trial of the Digital Turkish Lira was successful, with Central Bank of Turkey (TCMB) officials expressing great satisfaction with the test results.
There are many public news stories that can be accessed to find out more about the various projects involving countries around the world in the use of digital currencies. The United States, England and Australia have also announced the start of projects related to this.
The data show us that countries with a developing economy are the most likely to start projects quickly, while European and Central American countries seem to be going more cautiously.
The reasons why are clear: a digital currency would promote the inclusion of a large part of the population in the financial world. Furthermore, cash is slowly disappearing and digital payments are going through private systems, a digital currency would make this transition obsolete.