Ripple is venturing in a new direction by collaborating with The Republic of Palau to pilot a USD-backed stablecoin on XRP Ledger.
Ripple, the blockchain technology firm, and the Republic of Palau have teamed up for a groundbreaking stablecoin project. According to Ripple’s latest post, the two partners will work on issuing a Palau Stablecoin (PSC), backed by the U.S Dollar and operating on the XRP Ledger (XRPL).
The Palau Enables First Domestic CBDC Payment
The initial phase of the Palau Stablecoin pilot has reportedly commenced. Phase One pilot involves the participation of Palau government employees in using PSC for transactions with select local merchants.
The Palau Ministry of Finance (MO) has real-time, round-the-clock control over securely minting, distributing, and processing inbound PSC redemptions. Palau government employees can seamlessly use PSC for purchases at selected retailers, facilitating smooth point-of-sale transactions.
Palau retailers can securely receive and verify PSC payments, with the option to convert the stablecoin into funds in their local bank accounts.
As part of the partnership, the Republic of Palau will leverage Ripple’s Central Bank Digital Currency (CBDC) Platform for the new stablecoin pilot. The Ripple CBDC Platform was rolled out in May this year, aiming to provide financial services providers and institutions with the ability to create their own digital currency.
By adopting this solution, Palau has full control over the lifecycle of the stablecoin, transactions, distribution, and redemption. President S. Whipps Jr. expressed confidence that digitizing the national currency would drive economic progress and empower citizens.
The Palau Stablecoin (PSC) is expected to benefit 18,000 citizens, merchants, and the government.
Financial inclusion will expand, and citizens will experience significantly reduced transaction fees. Moreover, the stablecoin will expedite transaction settlements and cross-border payments, enhancing the efficiency and security of commercial activities in Palau.
If successful, the Palau stablecoin pilot program is set to expand further. The objective is to introduce the advantages of PSC to a broader audience.
Jay Hunter Anson, the FinTech Project Manager for the Palau Ministry of Finance, stated that the pilot project’s success would determine its potential extension after two months.
He said, “The Palau Stablecoin offers a “fee-free” secure, transparent, and convenient option for payments that is more efficient than other online payment services.”
The partnership with Ripple and utilizing the XRP Ledger represent a significant milestone in stablecoin adoption, promising a secure, efficient, and eco-friendly payment solution for citizens and merchants.
Central Banks Use Ripple’s CBDC Solution
With this ambitious leap into the digital economy, The Palau has become among the first countries in the northern Pacific Ocean to issue a stablecoin. On the other hand, it’s not the first country to explore the use cases of blockchain technology through Ripple’s support.
The crypto solution provider has reportedly been in talks with 20 governments to facilitate the issuance of CBDC. The firm previously announced its partnership with Columbia’s Central Bank, Banco de la República. The collaboration’s goal is to pilot a CBDC project on XRP Ledger.
Ripple’s mission to onboard more central banks and financial institutions onto its CBDC platform comes amid the hectic race toward the CBDC system. While economic powerhouses like China or the U.S. are developing their own CBDCs, other countries choose Ripple’s solution to create digital currencies.
Ripple’s efforts to push cross-border payments through its blockchain have particularly increased after the court’s ruling earlier this month. The legal battle between Ripple and the U.S. Securities and Exchanges Commissions (SEC) ended with the verdict outlining that XRP was not a security, and thus gave the crypto firm a partial victory.
Now, it looks like Ripple is growing globally, and making new things happen.