The Republic of Palau taps Ripple for first stablecoin pilot
The Republic of Palau, an island nation in the Pacific, has joined forces with Ripple to launch a limited stablecoin pilot.
Ripple selected by Republic of Palau for stablecoin pilot
The first stages of the pilot will see the Palau Stablecoin (PSC) issued to around 200 local merchants and government employees across the country.
PSC is to be backed by Palau’s official currency, the US dollar, at a rate of 1:1, and will be issued on the XRP Ledger (XRPL) blockchain.
Palau comprises of over 200 volcanic and coral islands, with each hosting a rich ecosystem of unique vegetation and wildlife.
For this reason, the application of XRPL in this instance is poignant for Palau, as it’s widely considered to be one of the most carbon-neutral blockchains and will therefore help the country reduce its carbon footprint as it looks to protect the islands’ natural habitats.
As part of its ongoing partnership with the US crypto solutions provider, which first started in 2021, Palau will make use of the Ripple Central Bank Digital Currency (CBDC) platform to “holistically manage and customise the entire life cycle of the stablecoin”, including for distribution and transactions.
In tandem with this, Palau’s Ministry of Finance (MOF) is expected to supervise the issuance and redemption of PSC to guarantee the 1:1 match with USD reserves.
What’s in it for Palau?
Rolled out in phases, the pilot is poised to provide a series of operational benefits for the country, including a reduction in transaction fees and currency costs while also boosting both transaction speed and financial inclusion.
Phase one of the pilot will allow government employees to make payments using PSC at select retailers by enabling those retailers to accept and receive such payments and convert PSC into funds in their local bank accounts. The MOF will also be able to mint, distribute and process inbound redemptions and destroy PSC with full control over circulation.
“By digitising our currency, we hope to mobilise our economy and government processes to improve financial transactions and empower our citizens,” explains the nation’s president, Surangel S. Whipps, Jr.
“As a smaller country, Palau has the advantage to be innovative and nimble in releasing our stablecoin. We trust in Ripple’s long-standing expertise in CBDCs and blockchain technology, as well as the carbon-neutral XRP Ledger to help create our national digital currency that will offer our citizens greater financial success.”
The pilot is expected to run for three months initially and the nation’s government will use the period to collect feedback from participating government employees, the MOF and participating merchants.
