The Republic of Palau and Ripple, a leading enterprise blockchain and crypto solutions provider, have launched a limited stablecoin pilot. The Palau Stablecoin (PSC) is a U.S. Dollar-backed digital currency issued on the XRP Ledger (XRPL), a carbon-neutral blockchain known for its privacy and security features. The pilot program will initially involve about 200 government employees and local merchants in Palau.
Ripple’s CBDC Platform will be utilized in this controlled stablecoin pilot, enabling Palau to manage and customize the entire life cycle of the PSC, including distribution and transactions. Each PSC will be valued at one U.S. Dollar, backed by a 1:1 reserve in fiat currency, and the system will be supervised by the Republic of Palau’s Ministry of Finance (MOF) to ensure the stability of the stablecoin.
Palau’s President, Surangel S. Whipps, Jr., expressed that digitizing their currency will improve financial transactions and empower their citizens, and Ripple’s expertise in CBDCs and blockchain technology, along with the carbon-neutral XRPL, will aid in creating the national digital currency.
During Phase One of the pilot, Palau government employees who volunteered for the program will receive PSC to be used in the pilot. The PSC aims to provide greater financial inclusion, reduce overall transaction fees for citizens, lower currency costs, and increase transaction speed for the citizens, merchants, and government of Palau.
The success criteria for Phase One include secure and reliable minting, distribution, processing of redemptions, and destruction of PSC with full control over total circulation. Additionally, government employees should be able to make purchases using PSC, and retailers should be able to safely receive and verify PSC payments and convert them to funds in their local bank accounts.
Following the success of Phase One, further phases of the Palau stablecoin will be rolled out later in the year. The PSC is expected to offer numerous benefits to Palau, including financial inclusion and reduced transaction costs, contributing to the country’s economic growth and reduced carbon footprint.
More information about the Palau Stablecoin Project is available here.