Republic of Palau Launches US-Backed Palau Stablecoin in Next Stage of Collaboration with Ripple on XRP Ledger

The Republic of Palau and Ripple have launched a limited stablecoin pilot [program]. Palau and Ripple, a leader in enterprise blockchain and crypto solutions, began collaborating on exploring potential use cases in 2021 . The US-backed Palau Stablecoin (PSC) will be issued on the XRP Ledger (XRPL), a carbon neutral blockchain that has been used to perform millions of transactions over the course of 10 years, enabling privacy and security for the transaction and liquidity of tokenized assets. The pilot program will be implemented in phases, with the first phase involving the participation of approximately 200 government employees and local merchants in Palau.

As part of this controlled stablecoin pilot program, Palau will also take advantage of the Ripple CBDC Platform , a complete solution for central banks to issue their own digital currency, as well as the technical resources to make the PSC a digital representation of the official currency. of Palau, the US dollar. The enhanced platform will now allow Palau to holistically manage and customize the entire lifecycle of the stablecoin, including distribution and transactions. A stablecoin is a digital unit produced on a blockchain that maintains a fixed value.

In this case, each PSC would be valued at US$1 secured by a 1:1 fiat currency reserve and issued on the XRPL. The operating model follows other reserve-backed private stablecoins such as USDC or USDT, with a notable difference for the PSC with the participation of the Ministry of Finance (MOF) of the Republic of Palau. The MOF will oversee the system and trigger the issuance and redemption of stablecoin units, while always guaranteeing the 1:1 reserve.

“By digitizing our currency, we hope to mobilize our economy and government processes to improve financial transactions and empower our citizens. As a smaller country, Palau has the advantage of being innovative and agile when launching our stablecoin,” said President of the Republic of Palau Surangel S. Whipps Jr. “We rely on Ripple’s long-standing expertise in CBDC and blockchain technology, as well as the carbon-neutral XRP Ledger to help create our national digital currency that will offer our citizens greater financial success,” the statement added.

“Ripple is honored to work with the Republic of Palau to implement its stablecoin cryptocurrency to help Palau accelerate its business growth to produce and manage digital currency,” said James Wallis, Vice President of Central Bank Engagements for Ripple . “Palau is a Pacific island nation comprising more than 200 volcanic and coral islands, teeming with unique wildlife and vegetation. The launch of the Palau Stablecoin will help the island reduce its carbon footprint and its vulnerability to the impacts of climate change.”

During the first phase of the pilot program, Palau Government employees who have volunteered for the program will receive a PSC allowance to use for the pilot program.

The Palau Stablecoin (PSC) will bring many benefits to citizens, merchants, and the government. These benefits include greater financial inclusion and lower overall transaction fees for citizens. The PSC will also help reduce your foreign exchange costs, while significantly speeding up the speed of transactions.

To instill confidence in the citizens of Palau that the PSC is a safe and effective monetary tool that can support doing business in Palau, the criteria for the first stage of the controlled plan must achieve the following:

• Palau’s Ministry of Finance (MOF) will be able to securely and reliably issue, distribute and process incoming redemptions and seize PSC with complete control over total circulation on a 24/7 real-time basis. week.
• Palau government employees can make purchases of merchandise and services at select retailers using PSC transfer at the point of sale as a means of payment.
• Retailers in Palau can securely receive and verify payments made by people using the PSC, and can convert received PSCs to funds in their local bank account.