Southeast European nation Montenegro has joined forces with blockchain firm Ripple to launch the country’s first digital currency. The news broke out following the statements of Dr. Dritan Abazović, Montenegro’s Prime Minister.
According to a tweet on Jan. 18, Dr. Dritan Abazović recently met two Ripple’s executives – CEO Brad Garlinghouse and vice president James Wallis.
The topic of discussion is to further explore settlement of a digital currency or a stablecoin in Montenegro.
“In cooperation with @Ripple and the Central Bank, we launched a pilot project to build the first digital currency or stablecoin for Montenegro.”
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Montenegro applied to join the union in 2008 and the accession is expected to be approved in 2015. Although Montenegro isn’t part of the European Union (EU), the country currently uses the euro (EUR). It’s noteworthy that euro is not Montenegro’s legal tender.
Online banking and mobile payments have drawn a growing interest from citizens in Montenegro.
Coping up with innovations is, therefore, crucial. Ivan Boskovic, former Director of Payment Systems and Financial Technology Department of Centralna banka Crne Gore (Central Bank of Montenegro), discussed this matter in a public article on Monetary Research last month.
Titled “Central Bank of Montenegro: Doing How to accelerate banking and payments innovation in a small growing economy,” the article pointed out that digital transformation is a vital process that would eventually help finance achieve long-term goals.
This, on the other hand, poses more challenges in small countries like Montenegro compared to others with advanced economies.
Russia previously announced plans to launch a stablecoin.
As the Central Bank of Iran purportedly collaborates with the Russian government to jointly issue a new cryptocurrency backed by gold, a transition to a completely different national monetary and financial system is underway.
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In the face of Western sanctions, it is part of the country’s efforts to promote cross-border commerce. Despite Russia’s response, the application of financial sanctions has resulted in economic damage to Russia.
Ripple’s footprint in CBDC project development has grown in recent years. The crypto solution provider apparently collaborated with the Republic of Palau, a Pacific Ocean island nation, to investigate the formation of a national stablecoin.
Ripple previously created a private ledger for central banks to use in testing CBDCs in 2021. Qatar National Bank (QNB), the Middle East and Africa’s largest financial institution, announced plans to introduce cross-border payment services in conjunction with Ripple in October 2021.
The following year, Ripple promoted XRP, the native currency of the XRP Ledger, as the answer to the XRP problem. CBDC’s cross-border interoperability, referring to it as the ultimate currency-neutral bridge.
Despite suffering a significant loss in the lengthy legal battle with the SEC that began in late 2020, Ripple can be claimed to have successfully extended its global impact.
Expansion of the Middle East-North Africa payment channel with BankDhofar, Oman’s second largest bank. With the backing of NBE, Egypt’s largest and oldest bank, RippleNet will also be utilized for remittance payments between the UAE and Egypt.
Many other countries are rapidly moving toward CBDC adoption. The European Central Bank has also been eager to investigate CBDCs, with plans to propose legislation establishing a digital Euro by the second quarter of 2023.
The collaboration between Montenegro and Ripple occurred during the firm’s final chapter with the SEC. In December 2020, the SEC filed a lawsuit against Ripple Labs and its CEOs Brad Garlinghouse and Chris Larsen, alleging that the business violated securities laws.
Ripple was accused of raising more than $1.3 billion in its first public offering (IPO) by selling XRP as an unregistered security.
Over the last three years, the parties have made a variety of tentative moves without reaching a clear settlement. The case was later prolonged until 2023, although the ultimate verdict is expected this year.