Days after the arrest of Do Kwon, the founder of Terra Labs, on fraud charges, Montenegro announced its intention to develop a central bank digital currency (CBDC) in partnership with Ripple, a blockchain company.
Montenegro Partners With Ripple For CBDC
Montenegro has expressed interest in digital currencies and approached Ripple to develop a pilot program and strategy for a national digital currency or a Central Bank of Montenegro (CBCG) stablecoin.
According to Montenegrin Governor Radoje Žugić, their collaboration with Ripple aims to create a secure practical digital currency to test blockchain’s functionality and potential. It will also analyze the advantages and risks CBDCs could pose on availability, security, and efficiency of electronic means of payment while ensuring it is compliant with regulations. Most importantly, Zugic said the CBDC will protect citizens’ rights and privacy.
Their partnership with Ripple to develop Montenegro’s first digital currency is a step towards financial inclusion and accessibility for its citizens.
Ripple has been at the forefront of CBDC development in recent years. The blockchain company wants to connect disparate payment systems and champion blockchain’s utility in CBDC development as they also solve global payment issues.
Ripple’s Vice President of Central Bank Engagements and CBDCs, James Wallis, said their partnership with Montenegro would help the country address its core financial objectives.
Ripple has a proven track record of successfully connecting disparate payment systems and championing blockchain’s utility to issue Central Bank Digital Currencies and solve for global payments to hundreds of financial institutions around the world. We are pleased that the CBCG has chosen Ripple to help launch its first digital currency and further address the country’s core financial objectives.
The Arrest Of Do Kwon
The announcement comes days after the arrest of Do Kwon, the founder of Terraform Labs, who is wanted in the United States and South Korea for fraud and financial crimes related to the implosion of Terraform Labs’ coins, including LUNA and UST, an algorithmic stablecoin.
The development of CBDCs, which are different from privately issued stablecoins like the collapsed UST or USDT, is gaining momentum globally. CBDCs are backed by the government and can be issued on a private network.
CBDCs have several use cases, including widening financial inclusion, modernizing monetary policy, improving payment security, and increasing cross-border payments efficiency. However, CBDCs have been criticized as potential tools governments can use to censor dissidents and violate privacy.
The European Central Bank (ECB) is developing the Digital Euro concept as a future means of safe, secure, and practical electronic payment in the euro area.