Montenegro’s Central Bank to Work With Ripple on its National Stablecoin
The Central Bank of Montenegro (CBDG) has partnered with Ripple to develop a central bank digital currency (CBDC) pilot. Through the pilot program, the CBDG will be able to determine the practical applications and analyze the potential advantages and risks of CBDCs.
Montenegro Central Bank and Ripple to Work On CBDC Pilot
Blockchain-based digital payment protocol Ripple announced on Tuesday it has agreed with the Central Bank of Montenegro (CBDG) to develop a CBDC pilot that will serve as a national stablecoin. According to Ripple, the pilot will enable the CBDG to identify the practical application of a CBDC and create a design to simulate its circulation.
Montenegro central bank’s governor Radoje Zugic said the project aims to “analyze the advantages and risks that CBDCs or national stablecoins could pose concerning electronic means of payment availability, security, efficiency, compliance with regulations, and most importantly, the protection of end users’ rights and privacy.”
A CBDC is a digital form of central bank money issued and backed by a central banking authority and can be used as a legal tender for digital payments. Montenegro becomes the latest nation to join the global CBDC race with this move. Earlier this year, Japan’s central bank said it plans to launch a pilot program to conduct experiments on using a Digital Yen.
China is one of the global nations at the forefront of CBDC development, with its digital currency electronic payment (DCEP) project already in advanced testing stages. The People’s Bank of China (PBOC) started working on its CBDC project in 2014 and has already conducted several large-scale trials.
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Recent XRP Rally Driven by Retail Investors
XRP, a cryptocurrency issued by Ripple, has surged almost 40% in the past four weeks, more than what other top cryptocurrencies, including Bitcoin, gained during that period. According to crypto data provider Kaiko, the rally was fueled by retail investors, while institutional investors contributed to the bearish pressure.
“Looking at buy and sell transactions on the two largest Korean exchanges, Upbit and Bithumb, market sell orders overwhelmingly outpace market buys for orders over 200k XRP (~$95k). In contrast, the buy/sell ratio was much more balanced for smaller orders.”– Kaiko analysts wrote in a note on Monday.
The rally provides much-needed relief for XRP investors after the cryptocurrency’s massive decline after Ripple’s dispute with the US Securities and Exchange Commission (SEC). In December 2020, the SEC filed a lawsuit against Ripple, alleging that the blockchain company had raised $1.3 billion through an unregistered security offering by selling XRP to investors. Due to the case, several major crypto exchanges suspended XRP on their platforms, further weighing its price.
Do you think the US central bank will ramp up its efforts to develop a digital dollar? Let us know in the comments below.