Ripple has announced a collaboration with the Republic of Palau to explore the feasibility of a national digital currency for the country.
The partnership between Ripple and the Republic of Palau
Palau is an island in the Pacific Ocean about 500 km east of the Philippines, which only became independent in 1994.
It does not currently have its own national currency, as it still uses US dollars, of which it was a part until 1994 and with which it has maintained excellent relations.
The partnership with Ripple will focus on developing strategies for cross-border payments, and on creating a national digital currency anchored to the dollar currently in use.
The world’s national stablecoin, backed by the government and collateralized in USD, could thus be launched by the end of the first half of next year, for which Ripple would provide Palau with technical, commercial, design and political support.
Also under study is the possibility of using the XRP blockchain as the basis for stablecoins that are alternatives to CBDCs.
The Ministry of Finance of the Republic of Palau aims for sound financial management that encourages accountability, continuous productivity of government services and economic growth. It also states that it will serve the country with integrity and character, and with zero tolerance for fraud and corruption.
The state understands the potential of financial technologies, including blockchain, as part of a strategy to transform its economy and position the country as a highly desirable country to do business with. These technologies will also help make cross-border remittances more efficient.
A digital currency with Ripple
Ripple was also chosen because of its low energy consumption and the company’s expertise in blockchain and global payment systems. XRPL, the XRP blockchain, is also sufficiently scalable, fast and low-cost.
Palau president Surangel S. Whipps Jr. said:
“As part of our commitment to lead in financial innovation and technologies, we are delighted to partner with Ripple. The first phase of the partnership will focus on a cross-border payments strategy and exploring options to create a national digital currency, providing the citizens of Palau with greater financial access”.
Ripple’s vice president of Central Bank Engagements, James Wallis, added:
“We are excited to be working with Palau to achieve its financial and climate-related goals. We have a wonderful opportunity to bring together our technology and experience with the unique characteristics of Palau to make a real economic and social impact for the country”.