By Norah ODonnell
The San Francisco- based blockchain firm Ripple has penned a partnership agreement with the Central Bank of Montenegro (CBCG) to develop a digital currency. An official publication on the CBCG website dated April 11 revealed that the Ripple team would formulate strategies to create the first central bank digital currency (CBDC).
The report stated that the CBCG team would work closely with crypto firms to launch a pilot program for the proposed CBDC.
Significance of Central Bank of Montenegro and Ripple Partnership
According to the CBCG core values, the employees are encouraged to develop innovative ways to digitize the financial sector. Also, Montenegro’s apex bank has embraced an innovative culture to motivate the staff to develop creative solutions that will boost financial accessibility and inclusivity in the country.
The test to attain CBCG’s common goal has challenged the bank to invest in developing its national stablecoin. The CBCG team will undertake the supervisory role, including managing Montenegro’s digital currency issuance.
An announcement from the CBCG Governor Radoje Žugić revealed that the bank has been investing in developing and maintaining a well-functioning financial system.
Žugić was pleased to announce that the CBCG team has utilized its resources to monitor the trends in the banking sector. This evaluation has motivated the bank to develop innovative approaches to improving Montenegro’s financial industry.
He announced that the Ripple team would support the bank in conducting trials for the CBDC. While performing the CBDC pilots project, the bank plans to engage other government agencies, including the learning institutions, to obtain valuable input from scholars and developers.
Features of the Proposed CBDC
Moreover, the apex bank has highlighted the main feature of the CBDC that the public institution will extend its support. The CBCG team mentioned that during the experimentation of the CBDC, the team would assess whether the currency would protect the user from financial losses.
Also, the team will examine the impact of blockchain technology on the financial sector. Moreover, the April 11 report revealed that Žugić and the team would focus on critical features of the CBDC, such as the digital currency’s privacy, security, compliance, and reliability.
The team behind Montenegro’s CBDC plans to evaluate digital currency’s benefits, potential risks, and threats. According to the proposed procedures for conducting the CBDC trials, the projects team has formulated a pilot project plan that will act as a guide.
A review of the plan demonstrates that the CBDC will undergo multiple processes to enable the team to determine the application of the currency. Beyond this, the team will explore effective approaches to issue Montenegro’s digital fiat.
Based on the report, the circulation of the CBDC in the Montenegro market would necessitate financial regulators to formulate conditions and procedures for issuing digital currency.
Overview of Development of CBDC Globally
In support of Žugić remarks, CBCG vice president James Wallis argued that the development of the CBDC aims at revolutionizing Montenegro’s financial tools. Wallis confessed that the CBDC would support the government in addressing the financial crisis in Montenegro and other nations.
He believes that the Ripple team has extensive experience developing the CBDC. He announced that implementing Ripple’s payment infrastructures and blockchain technologies would provide revolutionary solutions to the financial challenges.
In addition, Wallis acknowledged the commendable achievement made by the Ripple team in addressing payment challenges in the financial sector. He remains optimistic that Ripple will provide abiding support in the development of CBDC.
Also, Wallis expects CBCG’s partnership with Ripple to support the Montenegro government in attaining long-term financial goals.
The development of Montenegro CBDC will position the country among other 100 countries pursuing the launch of digital fiat. According to Atlantic Council data, 114 countries are experimenting with their CBDC.
The report stated that the central banks conducting CBDC trials aim to improve financial inclusivity and amend the monetary policies to meet the financial market need. Furthermore, the regulators anticipate adopting CBDC will improve cross-border transactions and strengthen payment security.
The European Central Bank regulators recently argued that launching the Digital Euro would support the country’s financial system. The team revealed that digital currency would provide a secure, convenient, and reliable electronic payment method in the European block.
Besides the benefits of the Digital Euro, the development will support Montenegro in attaining its CBDC objective since the country is within the Eurozone.