Montenegro, a small Balkan country that unilaterally adopted the euro, is set to launch its own digital currency with the help of U.S.-based blockchain solutions provider Ripple. The Central Bank of Montenegro (CBCG) and Ripple have signed an agreement to collaborate on a strategy and pilot program to launch the country’s central bank digital currency (CBDC), also known as a “national stablecoin”. The move is aimed at digitalising financial services in the country and providing greater financial accessibility for its citizens. The CBCG will work with the Montenegrin government and academia to create a practical and secure digital currency while analysing the associated advantages and risks, including those concerning the protection of end users’ rights and privacy.
Over a hundred nations are currently exploring or developing CBDCs with multiple use cases in mind, including widening financial inclusion and modernising monetary policy, improving payment security and increasing the efficiency of cross-border settlements. Major economies such as China have advanced more than others with its digital yuan project. Trials are underway in over two dozen regions of the People’s Republic and more than 5.5 million merchants and other businesses are participating.
Despite the eurozone developing a digital version of the common currency, Montenegro has decided to start working on its own CBDC. The country is neither a member of the European Union nor of the eurozone but adopted the euro as its de facto legal tender in 2002. President of the European Central Bank (ECB) Christine Lagarde was quoted as stating in March that a digital euro, still in its investigation phase, will have a key role to play in safeguarding Europe’s payment autonomy. However, Montenegro is not in any official agreements with ECB regarding the euro and cannot take part in the process.
Governor Radoje Žugić has assured that the CBCG will collaborate on the CBDC with Ripple and create a practical and secure digital currency. James Wallis, Ripple’s vice president of central bank engagements and CBDCs, added that “The Central Bank of Montenegro is bringing the next level of digital transformation to its financial infrastructure and addressing some of the world’s biggest financial challenges, including financial inclusion.”
The Montenegrin digital currency project is expected to go through several stages, during which the participants want to simulate the coin’s circulation and use under controlled conditions. The CBCG will analyse the associated advantages and risks, including those concerning the protection of end users’ rights and privacy. The project’s aim is to provide greater financial accessibility for Montenegrin citizens and digitalise financial services in the country.
The introduction of the “national stablecoin” will represent another step towards digitalising financial services in the small Balkan country and providing greater financial accessibility for its citizens. The move comes as over a hundred nations are currently exploring or already developing CBDCs with multiple use cases in mind, including widening financial inclusion and modernising monetary policy, improving payment security and increasing the efficiency of cross-border settlements.
It remains to be seen whether Montenegro will issue its CBDC before the digital euro is launched. Nonetheless, the country’s move towards digitalising financial services is a significant step towards financial inclusion and modernisation.