The Republic of Palau and Ripple have launched a limited stablecoin pilot as the next phase of their collaboration. This initiative aims to explore potential use cases as well as drive financial innovation in Palau.
Ripple will issue the US dollar-backed Palau Stablecoin (PSC) on the XRP Ledger (XRPL), known for its secure and private transactions over a decade. The pilot programne will roll out in phases, starting with around 200 government employees and local merchants in Palau.
Leveraging the Ripple CBDC Platform, Palau gains access to an end-to-end solution for central banks to issue their own digital currency. The platform enables Palau to holistically manage and customise the stablecoin’s entire life cycle, including distribution and transactions.Each US Dollar-backed PSC will have a value of one US Dollar backed by a 1:1 reserve in fiat currency, and issued on the XRPL.
President of the Republic of Palau, Surangel S. Whipps, Jr., expressed optimism about the stablecoin’s potential impact: “By digitising our currency, we hope to mobilise our economy and government processes to improve financial transactions and empower our citizens. As a smaller country, Palau has the advantage to be innovative and nimble in releasing our stablecoin.”
While James Wallis, VP of Central Bank Engagements for Ripple, commended the collaboration, stating, “Ripple is honored to work with the Republic of Palau on implementing their stablecoin to help Palau accelerate their business growth by providing a single source for producing and managing digital currency.”
In Phase One of the pilot programme, government employees participating voluntarily will receive an allotment of PSC for use in the pilot. The PSC also offers numerous advantages, including greater financial inclusion and reduced transaction fees for citizens. Additionally, it will help reduce currency costs and significantly accelerate transaction speeds.
To ensure the secure and effective use of the PSC, Phase One’s success criteria include the secure minting, distribution, and processing of inbound redemptions by the Palau Ministry of Finance (MOF). Furthermore, government employees and select retailers should be able to make and receive payments using the PSC with confidence.
Upon successfully completing Phase One, Palau will roll out subsequent phases of the stablecoin later this year, further advancing the country’s financial landscape. The partnership between the Republic of Palau and Ripple aims to create a transformative digital currency that fosters economic growth and financial success for its citizens.