Ripple Partners With Island Nation Palau To Explore National Digital Currency
The Republic of Palau and Ripple partner up to explore the creation of a national digital currency.
According to a press release Ripple, the payment giant behind XRP ledger, has partnered with the Republic of Palau to help to explore the country’s first national digital currency and its use cases.
Ripple will be working on designing a USD-backed stablecoin that will help create other services such as corporate registries, according to the annoucement.
Like El Salvador, the small island nation Palau does not have its independent fiat currency or even a central bank. Its citizens rely on USD to manage their purchases. However, Palau has also made it clear that the country does not want to adopt XRP or any cryptocurrency as legal tender but it aspires to issue a digital version of government-backed USD, which in fact is closer to a stablecoin rather than a central bank backed digital currency (CBDC).
Ripple, with its experience in building global payment systems, plans to implement the national stablecoin in the first half of 2022. And also provide Palau with technical, business, design, and policy support.
The President of Palau, Surangel S. Whipps Jr said that Ripple could provide the necessary technology that would cater to the financial aspects of Palau systematically. He said:
“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.”
Palau chose to create its digital currency on XRP Ledger (XRPL) as an alternative to central bank digital currencies (CBDCs). Being carbon-neutral and 120,000x more energy-efficient than proof-of-work blockchains is an added advantage. Additionally, the XRPL provides other benefits like scalability, speed, and low cost.
Ripple‘s regulatory challenges
Since the news of Ripple partnering with the Republic of Palau broke, there has not been any significant changes in its market prices. At the time of writing XRP is trading at $1.04 with 7.5% loss on a weekly chart.
XRP price has been struggling along with the market, but lot of XRP’s lack of performance has been attributed to regulatory issues that have plagued the crypto lately. In December 2019 the U.S. Securities and Exchange Commission (SEC) sued Ripple accusing the company of selling XRP as a registered security. The company had later defended its stance on the given accusations, but the case had created long term issues for the payment giant.
