The Republic of Palau, a Pacific island nation, has initiated a collaboration with Ripple to launch a pilot program for a government-issued stablecoin. This partnership began in 2021, with the aim of having the stablecoin operational by mid-2022.
Now, the project has entered its first phase, which will involve approximately 200 government employees and local merchants participating in the pilot. The stablecoin, backed by the U.S. dollar, will be issued on the XRP Ledger, Ripple’s environmentally friendly blockchain.
Additionally, Palau will utilize the Ripple Central Bank Digital Currency (CBDC) platform. This will allow the country to efficiently manage and customize all aspects of the stablecoin’s lifecycle, from distribution to transactions. The Ministry of Finance will oversee the system, ensuring the issuance and redemption of stablecoin units while maintaining a 1:1 reserve.
According to Ripple, the stablecoin aims to enhance financial inclusion, reduce transaction fees for residents, lower foreign exchange costs, and accelerate transaction speeds. President Surangel Whipps Jr. of the Republic of Palau stated, “By digitizing our currency, we aim to invigorate our economy and streamline government processes to enhance financial transactions and empower our citizens.”