Ripple, the firm behind the XRP cryptocurrency, has announced that it’s working with the Republic of Palau to help it outline its national digital currency strategy. The initial work will see the pair focus on cross-border payments and a USD-backed digital currency. If the plan goes ahead, the digital currency could be the first government-backed national stablecoin.
Commenting on the partnership, the President of the Republic of Palau, Surangel S. Whipps, Jr., 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.”
The partners have stated that they hope to deploy this digital currency in the first half of 2022 with Ripple providing technical, business, design, and policy support. Ripple believes that its ledger could provide other nations like Palau a “viable alternative” to the central bank digital currencies that countries like the UK have been looking at.
As an archipelago of hundreds of islands, Palau is also concerned about the impact cryptocurrencies have on the climate. Popular cryptos like Bitcoin have been slated for their use of Proof of Work which is carbon-intensive if the computers performing the mining are using energy from polluting sources such as coal. Ripple said that its ledger is carbon-neutral and 120,000 times more energy-efficient than Proof of Work blockchains. The firm also said its ledger is scalable, fast, and has low fees.
Palau joins a handful of other countries adopting nascent cryptocurrency technology. While the options countries are picking are a bit more centralised than Bitcoin, it looks like most around the world are now heading in a direction that sees them adopt blockchains for their national currencies.