Another central bank has chosen Ripple, a crypto payments company for cross-border remittances, to build its own Central Bank Digital Currency (CBDC).
Ripple has entered into a partnership with the Central Bank of Montenegro to develop a Central Bank Digital Currency (CBDC). During the World Economic Forum 2023 in Davos, the prime minister of Montenegro, Dritan Abazović, met with Ripple CEO Brad Garlinghouse and James Wallis, vice president of the company’s central bank engagements and CBDCs division, to discuss the creation of a payment infrastructure that would promote greater financial inclusion and accessibility.
The Central Bank of Montenegro (CBM) is the country’s central bank and is responsible for the country’s monetary policy and financial stability. The CBM was established in 1991 and its main objectives are to maintain price stability and to support the economic development of Montenegro. The CBM is an independent institution and its decision-making is guided by the principles of central banking.
Despite not having its own native currency, Montenegro utilizes the Euro as its official currency. Prior to 2002, Montenegro used the Deutsche Mark as its official currency. Since then, it has been using the Euro.
Central banks around the world working with Ripple
Ripple has expressed interest in Central Bank Digital Currencies (CBDCs) as an area of focus for the year 2023. Ripple has stated that it aims to support central banks in their CBDC initiatives by providing efficient and secure solutions for cross-border payments. Ripple’s blockchain technology and digital asset, XRP, are being positioned as potential components in CBDC ecosystems for facilitating fast and cost-effective cross-border transactions.
Many central banks are actively working with Ripple. The blockchain payments company has partnerships with several financial institutions and central banks around the world, but the exact number is not disclosed by the company. The XRP community can only estimate that around 40-50 central banks are working with Ripple. The level of engagement and extent of collaboration can vary greatly among these partnerships. Some central banks may be simply exploring the potential of Ripple’s technology, while others may be more actively involved in pilot projects or live deployments.
XRP use case
Positive developments are rising for the adoption and integration of blockchain technology in the financial sector. However, the extent and specifics of these partnerships, as well as the role of XRP, can vary greatly among central banks. In some cases, central banks may be primarily interested in using Ripple’s blockchain technology for cross-border payments without incorporating XRP. In other cases, XRP may play a more prominent role as a bridge currency for facilitating cross-border transactions.
As a result, it is too soon to determine the full impact of central bank partnerships on the use case and future of XRP. While the partnerships are certainly a positive development for XRP and the wider blockchain industry, the success and adoption of XRP will ultimately depend on various factors such as regulatory environment, market demand, and technological advancements.
Central banks around the world are exploring the potential benefits and challenges of issuing CBDCs as a new form of digital currency. Many central banks are investigating the potential for CBDCs to modernize financial systems and enhance the delivery of central banking services. The exact plans and timeline for CBDC implementation can vary greatly among central banks and will likely depend on various factors such as technological readiness and regulatory considerations.