The Republic of Palau has partnered with Ripple to explore the creation of the island country’s digital currency and the world’s first government-based national stablecoin. Ripple announced the partnership via its Twitter account.
While speaking on the partnership, Palau’s president made sure to convey his excitement. He shared that he is confident that Ripple was the right candidate for the task. He shared that the company has the necessary technology to develop Palau’s anticipated digital currency.
According to the announcement, Palau chose Ripple for its “experience in building global payment systems and in blockchains.” Additionally, the country chose the XRP ledger because it’s “energy-efficient and carbon-neutral.”
Palau’s president, Incumbent Surangel Whipps Jr., shared the various aims the partnership seeks to achieve. Firstly, to create a national digital currency. This digital currency will provide citizens with greater financial access. The partnership will also aim to facilitate the development of avenues for inter-border payments.
As part of the partnership deal, the crypto solutions provider will give Palau the policy support, technology, business, and design needed to develop the digital currency.
According to the announcement, the country will experiment with the XRP Ledger (XRPL) after getting a national digital currency. The XRPL is a decentralized public blockchain that is cost-effective, carbon-neutral, fast, and efficient.
As explained by Ripple, the blockchain will enable transactions of less than 5 seconds. Each transaction will cost less than a penny.
Is Palau Adopting the XRP Token?
As much as Palau is partnering with Ripple, it will not be adopting Ripple’sRipple’s XRP token. The country’s digital currency will be a stablecoin that will be US dollar-backed. A stablecoin is a crypto coin whose value ties to an outside asset such as gold or fiat currencies such as the US dollar. These outside assets help stabilize the price of the digital coin.
Since Palau has no central bank, the US dollar-backed stablecoin will be its central bank digital currencies(CBDCs) alternative. The digital coin will be the first government-backed stablecoin in the world once released in the first half of next year. Government-backed stablecoins will be a game-changer for countries that have no central bank.
The XRP token is currently undergoing a Securities and Exchange Commission (SEC) lawsuit. As a result, the token has suffered terrible consequences, such as a drop in market value. Additionally, the token lost its partnership with MoneyGram. XRP is currently trading at $1.02, a 2.83% drop within 24 hours.
More on the Republic of Palau
Palau is an island country located in the Pacific Ocean with a population of 22,000. The state has approximately 340 islands that form Caroline Islands’Islands’ western chain. According to World Bank data, the country has a GDP of $268 million.
Remittances majorly contribute to this country’s economy. Remittances refer to money that is sent home or to a country by its diaspora who have employment abroad. Countries such as Palau earn from remittances by charging a large percentage in the service fee.