Stablecoin to be Palau’s first digital currency
- Republic of Palau to create the world’s first government-issued national stablecoin
- Palau has partnered Ripple to explore the national digital currency and its use cases with the XRP Ledger
- Palau chose Ripple because of its extensive experience in blockchain and building global payment systems
Digital currencies are becoming increasingly sought after by governments and stablecoin is one way of doing it. Pegged to a market value, a stablecoin is like cryptocurrency. And one country that is hoping to create the world’s first government-issued national stablecoin is the Republic of Palau.
An archipelago of islands in Oceania, Palau has partnered Ripple to explore the national digital currency and its use cases with the XRP Ledger. The partnership will initially focus on developing strategies for cross-border payments and a USD-backed digital currency for Palau.
This could see the implementation of the world’s first government-backed national stablecoin in the first half of 2022 for which Ripple would provide Palau with technical, business, design, and policy support. Meanwhile, exploring a USD-backed stablecoin and associated use cases—such as a corporate registry—on the XRP Ledger could provide a viable alternative to central bank digital currencies (CBDCs) for countries like Palau.
“As part of our commitment to lead in financial innovation and technologies, we are delighted to partner with Ripple,” said President Surangel S. Whipps, Jr. “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.”
Palau understands the potential for financial technologies, including blockchain, to transform its economy and position the country as a highly desirable country to do business with. The same technologies will also transform how its citizens access financial services and enable efficient cross-border remittances.
The XRP Ledger provides financial institutions and government bodies such as Palau the ability to fully settle transactions for fractions of a penny and in just 3-5 seconds. To date, more than 5,400 currencies have been issued and traded on the XRP Ledger via its integrated decentralized exchange (DEX) and custom token functionality that makes it easy to create, issue, and manage any asset—including stablecoins.
“We are excited to be working with Palau to achieve its financial and climate-related goals,” said James Wallis, VP of Central Bank Engagements at Ripple. “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.”
As an established leader in the global climate debate, Palau chose Ripple because of its extensive experience in blockchain and building global payment systems, and the XRP Ledger because it’s carbon-neutral and 120,000x more energy-efficient than proof-of-work blockchains. What’s more, the XRPL provides significant benefits such as scalability, speed, and low cost.
Palau is just one of the many countries that are looking to leverage the benefits of cryptocurrencies. Earlier this year, El Salvador became the first country in the world to accept bitcoin as a legal tender. The country also just announced that it plans to construct a “Bitcoin City” near a volcano that will be funded by the cryptocurrency.
Nigeria became the first African country to roll out a national digital currency several weeks earlier while the Bahamas released the Sand Dollar in October 2020. Japan also recently announced plans for a new digital currency backed by bank deposits. The effort will involve the nation’s top banks and about 70 other companies and organizations.