Palau Partners With Ripple For Potential National US Dollar-Backed Stablecoin

Palau’s Stablecoin an Alternative to CBDCs

The news of the partnership was announced in a press release by Ripple on Tuesday (Nov. 23, 2021). According to the announcement, the initial focus of the partnership will be on working on a US dollar-backed stablecoin and a strategy to facilitate cross-border transactions for the country.

A statement from the President of Palau, Surangel Whipps Jr.reads:

“As part of our commitment to lead in financial innovation and technologies, we are delighted to partner with Ripple. The first phase of the partnership will focus on a cross-border payments strategy and exploring options to create a national digital currency, providing the citizens of Palau with greater financial access.”

The collaboration with Ripple would make Palau the first country globally to have a national stablecoin. The announcement said that a stablecoin pegged to the US dollar could be an alternative to central bank digital currencies (CBDCs) being developed by other countries.

An excerpt from the press release said:

“Meanwhile, exploring a USD-backed stablecoin and associated use cases—such as a corporate registry—on the XRP Ledger could provide a viable alternative to central bank digital currencies (CBDCs) for countries like Palau.”

The Island country decided to collaborate with Ripple because of the latter’s experience in global payment and blockchain technology, and also the XRP Ledger because it is carbon-neutral and it is many times more efficient than proof-of-work blockchains.

Ripple also stated that the use of the XRP Ledger will benefit Palau, as transactions are settled within five seconds and at a very minimal cost.

Apart from Palau, more Island countries are researching and developing digital versions of their various fiat currencies. The Bank of Jamaica earlier announced that it would conduct a CBDC pilot. Back in October 2020, the Bahamas became the first country globally to launch a national digital currency, called the Sand Dollar.

Major Payment Companies Enable Support Support Stablecoins

Meanwhile, stablecoins continue to gain interest, with private payment companies enabling support for the asset-backed currency on their platforms. Global payments giant Mastercard, in July, partnered with Circle, the issuer of the second-largest stablecoin USDC.

The partnership, which also involves Evolve Bank Trust as well as Paxos Trust Company, will facilitate the seamless conversion of cryptocurrency to fiat, with USDC as a settlement option.

Financial services company, Visa, also partnered with the personal finance app Tala, Circle, and Stellar Foundation to give several underbanked people access to crypto. Tala, though these partnerships, will make it easier for consumers without access to financial services to buy, sell, and store USDC.

Head of Crypto at Visa, Cuy Sheffield, said at the time:

“Digital currencies like USDC have the potential to extend the value of digital payments to a greater number of people and places. We’re excited to partner with Tala’s global team to bring the benefits of the crypto economy to the populations that need it most.”

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