The national digital currency will not necessarily have the characteristics of a CBDC, Ripple said
Global digital payment services network Ripple has partnered with the Republic of Palau to develop a USD-backed digital currency that will enable seamless cross-border transactions.
The partnership between the Pacific Island nation and the crypto giant echoes the true decentralisation ethos of the crypto industry which seeks to ensure accessibility beyond traditional financial centres.
In an announcement earlier today, Ripple stated that the collaboration has the potential to execute the world’s first government-backed national stablecoin. The company further stated that the national digital currency could be implemented as early as the first half of 2022. However, such a currency may not necessarily be classified as another CBDC, Ripple clarified.
Palau President Suangel Whipps Jr. stated that the government seeks to provide greater financial accessibility to citizens via the national digital currency.
For Palau, a partnership with Ripple means various levels of technical, business, design and policy support. For Ripple, exploring a USD-backed stablecoin and its associated use cases is crucial in developing a viable alternative to Central Bank Digital Currencies for countries like Palau. Use cases that the company is looking to explore include corporate registry on the XRP ledger.
As an island nation, Palau is one of the most vulnerable countries to the adverse effects of climate change. This made it necessary that any financial solution the country could implement was environmentally sustainable. Ripple stated that the XRP ledger is carbon-neutral and 120,000 times more energy-efficient than Proof-of-Work blockchains and thus, fit for the job.
James Wallis, VP of Central Bank Engagements at Ripple highlighted that the company was excited to work with Palau on both 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.”