Georgia is taking a significant step towards digital currency. With its sights set on European Union membership, the National Bank of Georgia (NBG) aims to ensure that its central bank digital currency (CBDC), the digital lari, can interoperate with a future digital euro while maintaining the nation’s monetary independence.
NBG’s Vision for the Digital Lari
A recent announcement by the NBG detailed its plans to progress research on the digital lari CBDC within a confined live pilot environment. Out of the numerous tech companies in consideration, Ripple Labs is one of the nine firms enlisted for this venture. Ultimately, one of these participants will be chosen to progress to the subsequent phase of testing.
Previously, in a February paper, the NBG revealed its design considerations for the CBDC. The institution envisaged a two-tier design where the digital wallets would be facilitated by a third-party entity. This proposed CBDC would not just be digital money; it would be programmable and would have the capability to support the tokenization of assets.
GEORGIA #CBDC ➡️ DIGITAL LARI PROJECT @Ripple
NBG (NATIONAL BANK OF GEORGIA) has shortlisted 9 companies that have demonstrated sufficient technology potential, maturity, capacity, relevant experience, and desire to join our on-field exploration:
🔹 Ripple Labs, Inc.
🔹… https://t.co/ewdXQuFssB pic.twitter.com/JGs6GwOJhe— XRP DROPZ (@DROPZXRP) September 29, 2023
Varlam Ebanoidze, the head of fintech at the NBG, provided further insight into the potential use cases for the digital lari in a June interview. He highlighted that the CBDC could revolutionize sectors like agriculture by facilitating agricultural insurance and could also automate real estate transactions. Ebanoidze emphasized,
We are thinking about integration into the European Union and we want to be interoperable with the digital euro, but have monetary freedom.
This ambitious move wasn’t unexpected. In May 2021, the NBG hinted at the possibility of issuing a CBDC, though at the time, it did not provide a definitive timeline. By January, they had moved a step further, actively seeking interest from fintech companies to join a limited live pilot.
Global Collaborations and Pilot Participants
Linking to global CBDC initiatives, the NBG on Sept. 8 announced its observer status in the Bank of International Settlements’ (BIS) Project mBridge. This significant project sees the collaboration of China, Hong Kong, Thailand, and the UAE. Georgia is among approximately ten countries with observer status, indicating its intent to “leverage knowledge and expertise” from the BIS’s Project Aurum.
The pilot has drawn interest from diverse firms. Alongside Ripple Labs, other participants include Augentic, Bitt, Broxus Holdings, Currency Network, DCM, eCurrency Mint, FARI Solutions, and Sovereign Wallet. Ripple, in particular, has a known track record in CBDC projects globally, actively participating in endeavors in countries like Colombia, Montenegro, Hong Kong, Bhutan, and Palau.
In summary, Georgia is making substantial strides in the digital currency realm, showcasing its commitment to both technological advancement and potential EU integration. The inclusion of global giants like Ripple Labs in the pilot further underscores the significance and potential success of the digital lari initiative.
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