The National Bank of Georgia (NBG) is taking a significant step towards the development of a central bank digital currency (CBDC) by advancing its research in a limited-access live pilot environment. The NBG has announced that nine companies, including Ripple Labs, will participate in the project, with one of them eventually being selected to move forward to the next stage of testing.
In February, the NBG released a paper outlining its plans for a two-tier design of the CBDC. The wallets for the digital currency would be provided by a third party, and it would be programmable and support asset tokenization. This design allows for flexibility and integration into various use cases, including agricultural insurance and automation of real estate transactions.
Varlam Ebanoidze, the head of fintech at NBG, mentioned in an interview in June that the digital lari, or GEL, could potentially be interoperable with the digital euro while still maintaining monetary independence. This shows the NBG’s intention to integrate into the European Union while ensuring its own monetary freedom.
The NBG has been considering the issuance of a CBDC since May 2021, and in January, it invited expressions of interest from fintech firms to participate in a limited live pilot. The announcement of the collaboration with Ripple Labs and other companies marks a significant milestone in the development of the digital lari.
In addition to Ripple Labs, the other participating companies in the pilot include Augentic, Bitt, Broxus Holdings, Currency Network, DCM, eCurrency Mint, FARI Solutions, and Sovereign Wallet. Ripple Labs, known for its involvement in CBDC projects around the world, has been collaborating with central banks in countries such as Colombia, Montenegro, Hong Kong, Bhutan, and Palau.
The NBG also recently announced its participation as an observer in the Bank of International Settlements’ (BIS) Project mBridge. This initiative involves countries like China, Hong Kong, Thailand, and the United Arab Emirates, and the NBG aims to leverage the knowledge and expertise gained from the BIS’s Project Aurum.
The development of a digital lari CBDC is a significant step for the National Bank of Georgia. It demonstrates the bank’s commitment to exploring new technologies and making advancements in the digital currency space. As more central banks around the world consider the issuance of CBDCs, the National Bank of Georgia’s progress serves as an example of the potential benefits and possibilities of a digital currency future.
