Georgia is making significant progress in its adoption of digital currency, as it aims to ensure that its central bank digital currency (CBDC), the digital lari, can interoperate with a future digital euro while still maintaining the nation’s monetary independence. The National Bank of Georgia (NBG) has recently announced its plans to move forward with research on the digital lari CBDC, conducting a confined live pilot to test its feasibility. As part of this pilot, nine tech companies, including Ripple Labs, have been enlisted to participate, with the potential to progress to the next phase of testing.
In a February paper, the NBG outlined its design considerations for the digital lari CBDC. The proposed design involves a two-tier system, where digital wallets would be facilitated by a third-party entity. This CBDC would not simply be digital money, but rather a programmable currency with the ability to support the tokenization of assets.
The head of fintech at the NBG, Varlam Ebanoidze, highlighted the potential use cases for the digital lari in a June interview. He mentioned that the CBDC could revolutionize sectors like agriculture by facilitating agricultural insurance and automating real estate transactions. Ebanoidze also emphasized the importance of maintaining monetary freedom while integrating with the digital euro in preparation for possible European Union membership in the future.
The announcement of Georgia’s plans for a digital currency comes as no surprise, as the NBG hinted at the possibility of issuing a CBDC back in May 2021. By January, the bank had already begun actively seeking interest from fintech companies to participate in a limited live pilot.
The NBG’s efforts to develop a digital lari CBDC are not limited to domestic collaborations. The bank has also established collaborations on a global scale, participating as an observer in the Bank of International Settlements’ (BIS) Project mBridge. This project involves the collaboration of several countries, including China, Hong Kong, Thailand, and the UAE. Georgia’s observer status demonstrates its intention to leverage knowledge and expertise from the BIS’s Project Aurum.
The pilot program for the digital lari has attracted interest from various companies. Alongside Ripple Labs, participants include Augentic, Bitt, Broxus Holdings, Currency Network, DCM, eCurrency Mint, FARI Solutions, and Sovereign Wallet. Ripple Labs, in particular, has demonstrated its expertise in CBDC projects globally, actively participating in initiatives in countries such as Colombia, Montenegro, Hong Kong, Bhutan, and Palau.
Georgia’s progress in the digital currency realm showcases the country’s commitment to technological advancement and potential integration with the European Union. The involvement of global industry leaders like Ripple Labs adds credibility and increases the potential for success in the digital lari initiative.
In conclusion, Georgia is taking significant strides towards the adoption of a central bank digital currency, the digital lari. With plans for a confined live pilot and collaborations with global firms, the National Bank of Georgia aims to ensure interoperability with the future digital euro while preserving monetary independence. This move highlights Georgia’s dedication to technological advancement and potential EU integration.