• As the race heats up, Georgia will put CBD to the test in 2022

  • As the race for Central Bank Digital Currencies heats up, Georgia jumps in to launch its iteration. The preliminary tests will be aimed at retail use, with the apex bank emphasizing that it bears no resemblance to cryptocurrencies.

    Georgia Quickens Its Pace

    The National Bank of Georgia has announced that the pilot program for its CBDC, the digital lira, will begin in 2022. Papuna Lezhava, the bank’s vice-president, revealed this during a press conference.

    He stated that 85 percent of the world’s central banks are already investigating the concept of CBDCs, with countries at various stages of the process. “We also want to be on the cutting edge of this trend,” Lezhava said. The testing will begin next year with a focus on retail sales, with other applications following shortly after. The goal is to “improve the payment system’s efficiency and financial inclusion.”

    Lezhava was quick to clarify the situation with CBDCs. He clarified that they are not cryptocurrencies, but rather “the evolution of cash.” He went on to say that the CBDC will not be mined, and that the National Bank will be the only entity authorized to issue the currency. Although they are commonly used for transactions, CBDCs cannot be used for “speculative accumulation.”

    According to the bank’s vice president, “digital lari will become a faster and cheaper means of payment than traditional means.” It will be operational 24 hours a day, seven days a week. All transactions do not necessitate the use of an Internet connection.

    The Goals of the National Bank of Georgia

    Georgia’s central bank announced in April that it was considering the establishment of a CBDC. It recognized the CBDCs’ significance, stating that they “hold the promise of unlocking the tremendous value of innovative business models for the benefit of society.” As it considered making the leap, it announced that it was seeking full private-sector participation. It sought help with interface design, technology selection, and data management, among other things.

    The explosive growth of cryptocurrencies has prompted central banks all over the world to step up their efforts to launch CBDCs. CBDC projects such as the Bahamas’ Sand Dollar and China’s digital yuan are paving the way for other countries. According to the International Monetary Fund, 110 countries are at various stages of developing CBDCs, and their issuance could improve financial stability in developing economies.

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