Ripple and Palau Announce CBDC Stablecoin Pilot Program – Palau, an island nation located in the Philippines Sea, has joined forces with Ripple to introduce a limited pilot of its own stablecoin pegged to the U.S. dollar. This stablecoin is being issued using XRP technology. The primary aim of the pilot, which commenced approximately three weeks ago, is to verify the functionality and design of the stablecoin system.
According to Jay Hunter Anson, a board member of Palau’s Ministry of Finance, this initiative marks an important step in the partnership between Palau and Ripple. Palau, a country composed of over 500 islands, is currently conducting a trial of a stablecoin that is pegged to the U.S. dollar, leveraging the Ripple network’s capabilities.
Jay Hunter Anson, a board member of Palau’s Ministry of Finance, has confirmed that the pilot project commenced in March and, as of now, Palau’s Stablecoin (PSC) has been in circulation for three weeks. The main objective of this undertaking is to assess and validate the efficiency and structure of the stablecoin system, showcasing the collaborative efforts between Palau and Ripple.
Hunter Anson was the first to make a purchase using PSC, dubbed the “kluk,” purchasing a Micronesian breakfast at a collaborating vendor on July 13. He explained that PSC was “a prototype digitization of the U.S. dollar under development in partnership with Ripple using the XRPL blockchain.” If successful, this pilot could ostensibly revolutionize how inhabitants of Palau pay for goods and services.
Following its initiation, the pilot program has experienced growth by incorporating additional volunteers to participate in testing the digital currency across the three selected vendors. On July 23, Hunter Anson revealed that the second phase of Palau’s Stablecoin (PSC) distribution included 35 more volunteer users. In a recent press release, Ripple provided further details regarding the pilot program.
During its initial phase, the program is restricted to only 200 of Palau’s government employees who will be able to use the Palau Stablecoin (PSC) at the enrolled local vendors. The stablecoin issuance will take place through the Ripple central bank digital currency (CBDC) platform, granting Palau’s Ministry of Finance the authority to create, distribute, redeem, and eliminate the digital tokens.
Additionally, the Palau Finance Ministry will back the PSC with a reserve, ensuring that the stablecoin can be redeemed for U.S. dollars at a 1:1 ratio. The primary objective of this pilot initiative is to reduce transaction expenses, such as cash transfer fees and credit card payment charges, while simultaneously extending financial services to a greater number of Palauan citizens through digital means.
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On this, the President of the Republic of Palau, Surangel S. Whipps, Jr., stated: “By digitizing our currency, we hope to mobilize 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.”