Ripple to Help Montenegro Launch CBDC

Montenegro has joined dozens of nations around the world in pursuing a digital currency.

The Central Bank of Montenegro (CBCG) is working with cryptocurrency and blockchain firm Ripple to launch a central bank digital currency (CBDC), according to a Tuesday (April 11) press release.

“Through the project, the CBCG will work with the government of Montenegro and Montenegro’s academia to create a practical digital currency or secure currency solution to test the main blockchain technology’s functionality and potential,” the bank’s governor, Radoje Žugić, said in the release. “It will also 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.”

The project will go through a series of stages, including determining the practical application of a digital currency and the design to simulate its circulation and use in controlled conditions, per the release.

The hope is to develop a “CBDC for many use cases including widening financial inclusion, modernizing monetary policy, improving payment security and increasing cross-border payments efficiency,” the release stated.

The Ripple/CBCG partnership is happening amid a wave of CBDC activity. For example, the Digital Currency Monetary Authority unveiled Monday (April 10) a digital coin known as Universal Monetary Unit (UMU) and designed to speed cross-border transactions.

UMU is “legally a money commodity, can transact in any legal tender settlement currency, and functions like a CBDC to enforce banking regulations and to protect the financial integrity of the international banking system,” the DCMA said in a news release.

According to the release, banks can attach SWIFT codes and bank accounts to a UMU digital currency wallet and transact “SWIFT-like cross-border payments over digital currency rails.”

Also this week, the Bank of England has begun hiring workers to help launch its CBDC. The career section of the central bank’s website includes listings for a “digital pound solutions architect” and “digital pound security architect,” both added at the end of March.

Although the United Kingdom has left the European Union, it’s still one of 29 countries using the EU’s SEPA Instant Credit Transfer real-time payments scheme, which lets consumers clear cashless payments in seconds across the Single Euro Payments Area (SEPA).

That’s why the U.K. government will have to make a strong case for a digital pound, especially when access to instant payments is already part of consumers’ everyday lives, Martin Hargreaves, chief product officer at Quant, told PYMNTS earlier this month.

“That’s the real challenge for those designing the CBDC, which is to come up with something compelling enough that will interest consumers enough to open a CBDC account and actually use it,” he said.

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