Montenegro is a small country in Southeastern Europe, which is a part of the Balkans.
On 14 December 2021, Ivan Boskovic, the former Director of Payment Systems and Financial Technology Department at the Central Bank of Montenegro (“CBM”), published an article in currency Research titled “Central Bank of Montenegro: How to Boost Banking and Payment Innovation in a Small Developing Economy.”
“The transformation of existing conditions matters because it is a fundamental source of long-term growth. Financial services which rely on digital innovations are rapidly transforming markets, and this process has been accelerated by the Covid-19 pandemic. Many countries are now trying to catch up.
“Fostering innovation brings with it different challenges depending on the level of development, market size or even the geographic position of a country. When compared to the frontrunners, small markets face barriers that are much more challenging than those found in advanced economies.
“However, some countries such as Singapore, Luxembourg and Malta are among the frontrunners. Their visionary policies have paid off and they are now treated as role models for many others. The key question is whether their success can be easily followed or copied...
“Small countries often lack the most basic requirements, such as physical and human capital, which becomes more acute as technology develops. Their authorities are struggling to support innovation and in particular the accumulation of innovation capabilities. In order to design, implement, and coordinate an effective policy, policy makers must take into consideration everything that affects the accumulation of all types of capital—physical, human, and knowledge.”
He went on to talk about “what the Central Bank of Montenegro (CBM) is doing in order to implement digital payment innovations.”
Anyway, on 18 January 2023, Montenegro’s prime minister reported on his meeting with Brad Garlinghouse, who is Ripple’s CEO, and James Wallis, who is Ripple’s VP for Central Bank Engagements and CBDCs.
According to the translation by Google, Dr. Abazović told his Twitter followers:
“We discussed the development of a payment infrastructure that would provide greater financial accessibility and inclusion. Montenegro is open to new value and investments… In cooperation with Ripple and the Central Bank, we launched a pilot project to build the first digital currency or stablecoin for Montenegro.“
On 26 January 2023, Jeremy Hogan, a partner at the American law firm Hogan & Hogan, explained how the XRP Ledger (XRPL) could work with central bank digital currencies (CBDCs).
The XRP Ledger was created in 2012 by David Schwartz, Jed McCaleb, and Arthur Britto, and XRP is the native currency of the XRP Ledger.
Hogan told his over 251K Twitter followers:
“One possibility is that a CBDC could be issued on top of the XRPL as an IOU represented by a specific token. This would allow for the CBDC to take advantage of the XRP Ledger’s fast/efficient settlement times.
“Another possibility is that the CBDC’s Central Bank could open a “gateway” on the XRPL that allows users to deposit and withdraw the CBDC. This would allow for the CBDC to be used in conjunction with XRP and other digital assets on the XRP Ledger.
“It’s also possible that CBDCs will be pegged to XRP and interact with the XRP Ledger as a stable coin, which would allow for fast, cheap and efficient cross-border transactions.“
On 11 February 2022, the Digital Euro Association (DEA) announced that it was “delighted” about a new partnership with FinTech firm Ripple.
The Digital Euro Association (DEA) is “a think tank specializing in central bank digital currencies (CBDCs), stablecoins, crypto assets, and other forms of digital money.” Its mission is “to contribute to the public and political discourse through research, education, and by providing a platform and community for policy-makers, technologists, and economists to discuss digital money-related topics.” It’s “committed to independence and excellence, aiming to set the agenda and to shape policy by encouraging new ideas and forward-thinking in the field of digital money.”
In a blog post published on that day, the DEA started by talking about Ripple’s experience with central bank digital currencies (CBDCs):
“Ripple, one of the leading providers of enterprise blockchain and crypto solutions for cross-border payments, has recently developed a blockchain-based infrastructure to support CBDCs and is engaged with Bhutan’s central bank, amongst others, to help execute their CBDC pilot. Ripple is also a member of the Digital Pound Foundation and continues to extend its efforts around CBDCs worldwide.“
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