The project aims to develop a viable cross-border payments and US dollar-linked digital currency strategy for the country
San Francisco-based provider of blockchain solutions for cross-border payments companies, Ripple has partnered with the Palau to develop a sovereign virtual currency strategy. The company today shared a tweet of a blog post confirming the news. If the project is a success, Palau will have a virtual currency that will likely be the first state-backed national stable coin.
First plans to use the digital currency in the first half of 2022
Palau will bring Ripple’s technical and business know-how into its plans as it intends to launch the national stable coin before July next year. The parties are also trying to assess the feasibility of a USD-backed stable coin and its potential use cases in the XRP ledger.
“As part of our commitment to leading financial innovation and technology, we are excited to partner with Ripple.” Palau’s President Surangel S. Whipps, Jr. noted. “The first phase of the partnership will focus on a cross-border payments strategy and exploring options to create a national digital currency that will give Palau citizens better financial access.”
The ledger could be an alternative to a central bank-backed digital currency for the country, much like the UK has researched, according to Ripple. Palau is one of the countries that do not have their own currency and instead rely on the US dollar. However, it does not intend to adopt Ripple’s native token XRP or any other crypto coin as legal tender.
Follow the CO2-neutral approach
Palau, an archipelago of more than 500 islands known for its beautiful island scenery, has serious concerns about the environmental impact of digital assets like Bitcoin. Ripple made it clear that its XRP ledger is not only scalable and fast, but also environmentally friendly. The company added that the ledger is more efficient when compared to blockchains with the proof of work mechanism.
“Palau chose Ripple because of its extensive experience with blockchain and the development of global payment systems, and the XRP Ledger because it is climate-neutral and 120,000 times more energy-efficient than proof-of-work blockchains.” Ripple was mentioned in a press release.
Ripple’s James Wallis praised the opportunity to work with Palau on the project.
“We are excited to be working with Palau to achieve its financial and climate goals. We have the wonderful opportunity to bring our technology and experience together with the unique properties of Palau to create real economic and social impact for the country. ” Wallis, VP of Central Bank Engagements at the FinTech firm, notes.
Palau adds to the list of countries pursuing blockchain technology, although the island nation in the Micronesia region is embarking on a somewhat unique path.
The partnership with Ripple comes at a time when the latter is having legal problems with the U.S. Securities and Exchange Commission. The legal issues resulted in the company losing its partnership with peer-to-peer payments and money transfer company MoneyGram. Ripple chief executive Brad Garlinghouse said in a CNBC interview yesterday that the case is progressing well, adding that the case would likely close in the next year.