The National Bank of Georgia (NBG) has voiced its intentions of furthering its focus on a digital lari central bank digital currency (CBDC) and has chosen to conduct this research in a highly restricted live pilot environment. Interestingly, nine firms – including notable names like Ripple Labs – are participating in this pioneering project. Of these, just one will be selected to continue the testing and development process.
Earlier in the year, the NBG made a statement about envisaging a two-tier design that would be integral to its CBDC, with wallets being supplied by a third-party source. Coupled with this, the digital lari would be programmable and sustain asset tokenization.
The future prospects of building a digital lari are promising, with Varlam Ebanoidze, NBG’s fintech pioneer highlighting potential use cases including the provision of agricultural insurance and the automation of real estate transactions. Ebanoidze also accentuates the potential integration of the digital lari with the digital euro, while crucially maintaining monetary independence.
However, there are no confirmed timelines as of now, and the NBG has been pretty tight-lipped about the process. The bank did indicate its interest in a CBDC back in May 2021, and more recently, it started calling on fintechs to participate in the restricted pilot project slated to launch in the near future.
The Georgian CBDC initiative is part of a broader movement, one that goes beyond the country’s boundaries. The NBG recently announced its participation as an observer in the Project mBridge, a venture spearheaded by the Bank of International Settlements (BIS). Intriguingly, the project enlists a diverse set of participant countries that include China, Hong Kong, Thailand, and the United Arab Emirates.
Still, as encouraging as this may be, few can deny the evident skepticism that surrounds emerging CBDCs. Concerns often arise around potential monetary freedoms and whether they might be compromised with these digital currencies plus the uncertain impacts they could bring to financial markets. It’s a delicate balancing act, considering the potential benefits of financial inclusion, consumer convenience, and the promise of a more efficient monetary system.
The anticipated CBDC is a testament to the promising future of blockchain technology, though concerns about monetary freedom and market stability are worth noting. As Georgia continues to push forward with its CBDC project, it’s crucial to keep a cautious and observant eye on both the challenges and potential benefits that could stem from this, potentially pioneering, digital initiative.
Source: Cointelegraph
