The Republic of Palau, an archipelago of 500-plus islands and part of the Micronesia region in the western Pacific Ocean, is partnering with digital payment network Ripple to develop its own digital currency.
Palau Wants a Stablecoin, Not a CBDC
According to an announcement by Ripple on November 23, the partnership will focus on developing strategies for cross-border payments, resulting in the creation of the world’s first government-backed national stablecoin.
Ripple has experience building global payment systems and has made provision to implement its new stablecoin during 2022, looking to assist the country from a technical, business, design and policy perspective.
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.
Surangel Whipps Jr, Palau’s President
Interestingly, Palau has elected to create its own digital currency rather than a CBDC. One of the primary reasons for doing so is that the island nation has committed to being carbon-neutral and was apparently attracted to XRP on the basis of it being carbon-neutral and 120,000 times more energy-efficient than proof-of-work (PoW) cryptocurrencies. Furthermore, it saw XRP as offering advantages over PoW with regards to scalability, speed and reduced costs.
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.
James Wallis, VP, central bank engagements, Ripple
Despite its gaining a lot of positive attention, some have questioned the value of the partnership:
Ripple Moves Forward Despite SEC Case
Recently, Ripple joined Bhutan’s Royal Monetary Authority (RMA) to test retail, cross-border, and wholesale CBDC payment systems for a digital Ngultrum. And despite an ongoing battle with the US Securities and Exchange Commission (SEC), Ripple has plans to go public and provide support for nations issuing CBDCs.
Evidently, Ripple still has some obstacles to overcome in the near term. Notwithstanding, its recent actions suggest the company remains largely uninhibited in its push towards global adoption.
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