Montenegro and Georgia - European Engagements

Country Profile:

GEORGIA OVERVIEW:

POPULATION: ~3.7 million
GDP: ~$26 billion
EU STATUS: Candidate country (since 2023)
REGION: South Caucasus

- Georgian Lari (GEL)
- Independent currency
- Floating exchange rate
- Full monetary sovereignty

- National Bank of Georgia (NBG)
- Independent central bank
- Full monetary policy authority
- Currency issuance power

- Concentrated banking sector
- Growing fintech ecosystem
- Digital adoption increasing
- Remittances significant

KEY DISTINCTION FROM MONTENEGRO:

Georgia HAS:
✓ Own central bank
✓ Own currency (Lari)
✓ Ability to issue CBDC

Georgia CAN actually create CBDC.
More legitimate than Montenegro.
```

What Was Announced:

GEORGIA-RIPPLE ENGAGEMENT (2024):

ANNOUNCEMENT: February 2024

- National Bank of Georgia
- Ripple Labs

- Digital Lari exploration
- CBDC feasibility assessment
- Technology evaluation
- Cross-border payment potential

- Central bank involvement (legitimate)
- CBDC terminology used appropriately
- Own currency to digitize
- Recent announcement (2024)

GEORGIA vs. MONTENEGRO:

Georgia has what Montenegro lacks:
✓ Own currency (Lari)
✓ Central bank with issuance power
✓ CBDC is actually possible

Georgia is more credible CBDC context.
```

Why Georgia Might Want CBDC:

GEORGIA'S CBDC MOTIVATIONS:

1. REMITTANCES

1. FINANCIAL INCLUSION

1. REGIONAL POSITIONING

1. PAYMENT MODERNIZATION

USE CASE PRIORITIZATION:

1. Remittances (clear pain point)
2. Domestic payments efficiency
3. Financial inclusion
4. Cross-border trade

Remittances = Most compelling use case
~10% of GDP flows through this channel.
```

Current Position:

GEORGIA ENGAGEMENT STATUS:

- February 2024: Announced
- 2024-2025: Early stage
- Status: Recently initiated

- Official NBG announcement
- Early exploration phase
- No pilot results yet
- Too early to evaluate

- Newest in Ripple's portfolio
- ~1 year since announcement
- Insufficient time for judgment
- Needs 2-3 years for assessment

REALISTIC ASSESSMENT:

Georgia is legitimate CBDC opportunity:
✓ Own central bank
✓ Own currency
✓ Clear use cases (remittances)
✓ Recent engagement

Too early to assess trajectory.
Watch for NBG statements and updates.

PROBABILITY OF PRODUCTION CBDC: ~20%

(Lower than Colombia due to smaller economy,
but legitimate context)

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Side-by-Side Comparison:

MONTENEGRO vs. GEORGIA COMPARISON:

│ MONTENEGRO      │ GEORGIA
────────────────────┼─────────────────┼─────────────────
Population          │ 620,000         │ 3.7 million
Currency            │ Euro (uses)     │ Lari (own)
Central Bank        │ Limited powers  │ Full powers
Can issue CBDC?     │ NO (EUR is ECB) │ YES
Actual scope        │ Stablecoin      │ Real CBDC
Announcement date   │ Feb 2023        │ Feb 2024
Current status      │ Quiet           │ Early stage
Credibility         │ LOW             │ MEDIUM

KEY INSIGHT:

Montenegro can't create CBDC (uses Euro).
Georgia can create CBDC (has own currency).

These are fundamentally different contexts.
Should not be treated equivalently.
```

Comparative Position:

RIPPLE CBDC PORTFOLIO COMPARISON:

TIER 1 - MOST CREDIBLE:
┌─────────────────────────────────────┐
│ Colombia                            │
│ ✓ Large economy (52M)               │
│ ✓ Own central bank                  │
│ ✓ Own currency                      │
│ Status: Pilot (2 years)             │
└─────────────────────────────────────┘

TIER 2 - LEGITIMATE:
┌─────────────────────────────────────┐
│ Bhutan, Georgia                     │
│ ✓ Own central bank                  │
│ ✓ Own currency                      │
│ ✗ Small economies                   │
│ Status: Various (1-4 years)         │
└─────────────────────────────────────┘

TIER 3 - LIMITED:
┌─────────────────────────────────────┐
│ Montenegro, Palau                   │
│ ✗ No own currency (use USD/EUR)     │
│ ✗ Can only do stablecoins           │
│ = Not true CBDC opportunities       │
│ Status: Stablecoin or quiet         │
└─────────────────────────────────────┘

HONEST RANKING:

1. Colombia (largest, most legitimate)
2. Georgia (newest, legitimate)
3. Bhutan (legitimate but stalled)
4. Montenegro (can't do CBDC)
5. Palau (stablecoin delivered)

What European Presence Means:

RIPPLE'S EUROPEAN CBDC STRATEGY:

- EU regulatory alignment
- Digital Euro watching brief
- Smaller country testing
- Political stability

- ECB dominates CBDC discussion
- Eurozone countries can't act independently
- Non-Eurozone small and diverse
- Digital Euro may preempt national projects

STRATEGIC VALUE ASSESSMENT:

• Can't do real CBDC

• Waiting for digital Euro makes more sense

• Stablecoin utility limited

• Can do real CBDC

• But small economy

• Remittance use case genuine

• EU aspirations add context

REALISTIC VIEW:

Neither Montenegro nor Georgia
will transform Ripple's CBDC position.

• Too small for major reference
• Not Eurozone (where ECB matters)
• Digital Euro will set European standard

These are secondary markets.

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Why Small Countries?

RIPPLE'S SMALL COUNTRY FOCUS:

PATTERN ANALYSIS:

Country │ Population │ Feasible
──────────────┼────────────┼──────────
Palau │ 18K │ No CBDC possible
Montenegro │ 620K │ No CBDC possible
Bhutan │ 780K │ Yes but stalled
Georgia │ 3.7M │ Yes, early
Colombia │ 52M │ Yes, in pilot

4 of 5 < 4 million people
Only Colombia has meaningful scale

WHY SMALL COUNTRIES:

• Faster decision-making

• Less bureaucracy

• Easier to engage

• Lower competitive pressure

• Good PR regardless of scale

• Limited proof value

• Economic impact minimal

• Not reference for major economies

• "Pilot" forever possible

THE HONEST CONCERN:

• G20 engagements

• Major economy pilots

• ECB, Fed, BoE discussions

• Pacific islands

• Himalayan kingdoms

• Small Balkan/Caucasus states

The pattern suggests limitations.
```

Still No Production:

PRODUCTION STATUS ACROSS PORTFOLIO:

Country     │ Years │ Production CBDC?
────────────┼───────┼────────────────
Bhutan      │  4+   │ NO
Palau       │  3    │ NO (stablecoin)
Montenegro  │  2    │ NO
Colombia    │  2    │ NO
Georgia     │  1    │ NO (too early)

TOTAL: Zero production CBDCs

Note: Palau has stablecoin on public XRPL.
This is NOT a CBDC.
This is NOT using CBDC Platform.

WHAT THIS MEANS:

After multiple years and announcements,
Ripple has zero production CBDCs.

1. CBDC development takes time (true)
2. Central banks are cautious (true)
3. Ripple's approach has limitations (possible)
4. Competition is winning (possible)

We can't determine which.
But the gap is real and concerning.
```

The Elephant in the Room:

DIGITAL EURO IMPACT:

ECB DIGITAL EURO PROJECT:

Status: Investigation phase completed
Timeline: Preparation phase (2023-2025)
Potential launch: ~2028 (if decided)

KEY POINT:
When/if ECB launches digital Euro,
it will be THE European CBDC.

IMPLICATIONS FOR RIPPLE'S EUROPEAN ENGAGEMENTS:

• Uses Euro

• Will adopt digital Euro when available

• No need for separate solution

• Ripple engagement becomes irrelevant

• Has own currency

• Not Eurozone

• Digital Euro doesn't directly apply

• But EU accession might change this

• Similar to Montenegro dynamic

• Own solutions may become obsolete

• Digital Euro is the destination

STRATEGIC REALITY:

Ripple's European small country engagements
may have limited shelf life.

Digital Euro will dominate EU/Eurozone.
Non-EU countries tiny exceptions.

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✅ Montenegro cannot issue CBDC — Uses Euro without Eurozone membership. Only ECB can issue digital Euro.

✅ Georgia has legitimate CBDC context — Own central bank (NBG), own currency (Lari), full monetary authority.

✅ Both engagements are early stage — Montenegro 2+ years with little visible progress; Georgia ~1 year (too early to judge).

✅ Digital Euro will dominate European CBDC landscape — ECB's eventual digital Euro will be the standard for EU/Eurozone.

⚠️ Montenegro's actual scope — Stablecoin? Infrastructure? Or waiting for digital Euro?

⚠️ Georgia's trajectory — Too new to assess. Could succeed or follow Bhutan pattern.

⚠️ Strategic value of small European countries — Does this position Ripple for anything meaningful?

📌 Montenegro mislabeled as CBDC opportunity — Can't actually issue CBDC; stablecoin is best case.

📌 Small country pattern continues — No major European economy engagement.

📌 Digital Euro will obsolete some engagements — Montenegro and other Euro-users may not need independent solutions.

📌 No production anywhere — Pattern across all Ripple CBDC engagements remains consistent.

Montenegro and Georgia represent two different realities labeled similarly:

Montenegro cannot issue CBDC (uses Euro). At best, it might produce a EUR-backed stablecoin—similar to Palau's outcome. This has limited strategic value and may become irrelevant when digital Euro launches.

Georgia has legitimate CBDC potential with its own central bank and currency. The engagement is new (2024) and deserves time to develop. Remittances provide a genuine use case. But it's a small economy with uncertain trajectory.

Neither engagement will transform Ripple's CBDC position. Both are secondary markets at best. The absence of major European economy engagement (Germany, France, UK, etc.) is notable.

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Assignment: Compare two Ripple CBDC engagements systematically.

Requirements:

Part 1: Country Profiles (1 page)

• Central bank and authority
• Currency situation
• CBDC feasibility
• Key distinctions

Create a comparison table.

Part 2: Engagement Assessment (1 page)

• What was announced?
• What could actually be built?
• Current status?
• Probability of production CBDC?

Part 3: Digital Euro Impact (1/2 page)

• How does digital Euro affect each engagement?
• Timeline considerations
• Which engagement survives digital Euro?

Part 4: Strategic Value (1/2 page)

• What do these engagements add to Ripple's portfolio?

• Would success in either matter for larger markets?

• Honest assessment of strategic value

• 3 pages total

• Comparison tables required

• Probability estimates explicit

• Country analysis accuracy (25%)

• Engagement assessment quality (25%)

• Digital Euro analysis (25%)

• Strategic assessment honesty (25%)

Time Investment: 2-3 hours
Value: Framework for comparing diverse CBDC opportunities.

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For Next Lesson:
Lesson 11 examines Hong Kong's engagement—different from others as Hong Kong has participated in mBridge and explored Ripple. What does this overlapping approach indicate?

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End of Lesson 10

Total words: ~4,100
Estimated reading time: 45 minutes
Estimated deliverable time: 2-3 hours

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Course 59: Ripple's CBDC Platform Deep Dive
Lesson 10 of 18
XRP Academy - The Khan Academy of Digital Finance