Republic of Palau and Ripple Unveil Limited Stablecoin Pilot on XRPL
The Republic of Palau has joined hands with Ripple, a prominent player in enterprise blockchain and cryptocurrency solutions, to launch an experimental stablecoin pilot. Having embarked on their collaboration to explore potential use cases in 2021, the partners are now introducing the U.S. Dollar-backed Palau Stablecoin (PSC) on the XRP Ledger (XRPL) – a carbon-neutral blockchain renowned for its secure and private settlement and liquidity of tokenized assets, with a decade-long track record of millions of transactions.
The phased pilot program will kick off with the involvement of approximately 200 government employees and local merchants in Palau, allowing them to interact with the PSC.
To bolster this controlled stablecoin pilot, Palau will harness the Ripple CBDC Platform, a comprehensive solution empowering central banks to issue their own central bank digital currency. Additionally, Ripple’s technical resources will be employed to ensure that the PSC represents a digital version of Palau’s official currency, the U.S. Dollar, offering the nation greater flexibility in managing and customizing the entire life cycle of the stablecoin, including its distribution and transactions. A stablecoin, in essence, is a digital unit that maintains a fixed value, and in this case, each PSC will be pegged to the U.S. Dollar at a 1:1 ratio, backed by an equivalent reserve in fiat currency, and issued on the XRPL.
Distinguishing itself from other reserve-backed private stablecoins like USDC or USDT, the PSC introduces a notable distinction by actively involving the Republic of Palau’s Ministry of Finance (MOF). The MOF will oversee the system, ensuring the smooth issuance and redemption of stablecoin units, always guaranteeing the 1:1 reserve, thus elevating the level of trust and regulatory compliance in the stablecoin’s operations.