Ripple Leads the Way in Creating First Digital Currency for Montenegro

Dr. Dritan Abazovi, Montenegro’s prime minister since 28 April 2022, recently reported on a meeting with two executives from the FinTech startup Ripple.

Montenegro is a tiny country in Southeastern Europe and a Balkan country.

Ivan Boskovic, the former Director of the Payment Systems and Financial Technology Department at the Central Bank of Montenegro (“CBM”), published an article titled “Central Bank of Montenegro: How to Boost Banking and Payment Innovation in a Small Developing Economy” in currency Research on 14 December 2021.

“The alteration of current conditions counts since it is a crucial source of long-term growth,” noted Boskovic. Financial services that rely on digital advances are quickly altering markets, and the Covid-19 epidemic has hastened this trend. Many countries are currently working hard to catch up. Fostering innovation presents distinct problems based on a country’s degree of development, market size, or even geographic location. When compared to the leaders, tiny markets confront far more difficult restrictions than those found in established economies. Singapore, Luxembourg, and Malta, on the other hand, are among the frontrunners. Their bold ideas have paid dividends, and they are now seen as role models for many others. The essential question is whether or not their achievement can be simply replicated…

“Small nations frequently lack the most fundamental prerequisites, such as physical and human capital, which becomes more apparent as technology advances. Their governments are struggling to encourage innovation, particularly the development of innovative capabilities. Policymakers must analyze everything that impacts the accumulation of all forms of capital—physical, human, and knowledge—to plan, implement, and coordinate a successful policy.”

He then discussed “what the Central Bank of Montenegro (CBM) is doing to develop digital payment technologies.”

Anyway, on January 18, 2023, Montenegro’s prime minister commented on his meeting with Ripple CEO Brad Garlinghouse and VP for Central Bank Engagements and CBDCs James Wallis.

According to Google Translate, Dr. Abazovi told his Twitter followers:

“We discussed the creation of a payment infrastructure that would increase financial accessibility and inclusiveness. Montenegro is open to new opportunities and investments… We initiated a pilot project with Ripple and the Central Bank to create Montenegro’s first digital currency or stablecoin.”

Jeremy Hogan, a lawyer at the American legal firm Hogan & Hogan, detailed how the XRP Ledger (XRPL) may operate with central bank digital currencies on January 26, 2023. (CBDCs).

The XRP Ledger was founded in 2012 by David Schwartz, Jed McCaleb, and Arthur Britto, and XRP is the XRP Ledger’s native currency.

“One idea is that a CBDC might be created on top of the XRPL as an IOU represented by a particular token,” Hogan informed his over 251K Twitter followers. This would allow the CBDC to benefit from the XRP Ledger’s quick/efficient settlement times. Another option is that CBDC’s Central Bank may establish a “gateway” on the XRPL that will allow users to deposit and withdraw CBDC. This would enable CBDC to be used alongside XRP and other digital assets on the XRP Ledger. “It’s also possible that CBDCs would be tied to XRP and work with the XRP Ledger as a stablecoin. This would make cross-border transactions fast, cheap, and easy.”

The Digital Euro Association (DEA) established a new cooperation with the FinTech business Ripple on February 11, 2022.

“A think tank focusing in central bank digital currencies (CBDCs), stablecoins, crypto assets, and other forms of digital money,” according to the Digital Euro Association (DEA). Its purpose is to “contribute to the public and political debate through research and teaching, as well as by offering a forum and community for policymakers, technologists, and economists to discuss digital money-related subjects.” It is “dedicated to independence and quality, striving to set the agenda and shape policy in the field of digital money by fostering innovative ideas and forward-thinking.”

The DEA began their blog post on that day by discussing Ripple’s expertise with central bank digital currency (CBDCs):

“Ripple, one of the leading suppliers of enterprise blockchain and crypto solutions for cross-border payments, has recently created a blockchain-based infrastructure to enable CBDCs and is working with Bhutan’s central bank, among others, to assist execute their CBDC trial. Ripple is also a member of the Digital Pound Foundation and continues to expand its work in the CBDC space throughout the world.”