A significant portion of Montenegro’s population lacks access to the banking system, making financial transactions like receiving pensions or paying bills difficult. Digital currencies could offer an ideal solution, allowing people to send and receive money without intermediaries, using only a mobile phone.
Montenegro’s Central Bank (CBCG) began exploring digital currencies in collaboration with Ripple, a blockchain and cryptocurrency solutions provider, to develop a strategy and pilot program for launching the country’s first digital currency – a central bank digital currency (CBDC) or national stablecoin. CBCG’s goal is to enhance its knowledge of digital currencies and blockchain technologies.
Stablecoins vs digital currencies
A key difference between stablecoins and digital currencies is that the latter is issued by central banks, with state control over issuance. Examples of digital currencies include China’s digital yuan and Nigeria’s eNaira. Stablecoins, on the other hand, are cryptocurrencies tied to a stable asset (e.g., the US dollar) and are issued by private companies.
Montenegro’s Perper.net team launched EUROPE, a stablecoin backed by the euro, which will operate on the PlumeNetwork blockchain. EUROPE is compliant with European standards and aims to provide a reliable digital currency for everyday use.
Pilot project with ripple
CBCG’s pilot project with Ripple focused on developing institutional knowledge around digital currencies. It included simulations for scenarios like digital child benefit payments and interbank liquidity loans. However, the project was paused in 2023 after the European Central Bank (ECB) prioritized the development of the digital euro. CBCG remains in dialogue with the ECB, awaiting regulatory developments for the digital euro.
Strategic importance
CBCG acknowledges the global shift toward digital currencies and recognizes the importance of preparing for potential digital euro integration. The Bank for International Settlements (BIS) reported that 93% of central banks worldwide are exploring digital currencies, and the International Monetary Fund (IMF) has recommended that central banks, particularly in small economies like Montenegro, enhance their regulatory frameworks.
Perper.net’s contribution
Perper.net’s EUROPE stablecoin is backed by euro reserves and fully compliant with European standards. The stablecoin project has been supported by partnerships with international blockchain projects and was accepted into Montenegro’s Securities Commission regulatory sandbox in 2023.
Future of digital currencies in Montenegro
Montenegro’s move toward digital currencies depends on future government actions and regulatory frameworks. Whether the pilot projects initiated by CBCG and the Perper.net team continue will be determined by ongoing government support and the broader European regulatory landscape.
