The Republic of Palau has entered into a partnership with crypto company Ripple to help the island nation have its own CBDC. Speaking of the partnership, Ripple disclosed that the partnership’s main focus is to just develop a regular CBDC, but one that would be backed by the government, more like a stablecoin.
Palau’s USD-backed stablecoin will enable cross-border payments in the nation, starting from H1 of 2022. If both parties pull this off, Palau could be the first nation to implement a government-backed stablecoin.
Ripple Will Offer Technical and Design Support
While discussing the partnership and use cases of the stablecoin, Ripple disclosed that it would provide Palau with technical and design support to ensure that its CBDC will be a success. The company also said that it will offer policy support to set up the stablecoin using the XRP ledger.
Having a government-backed stablecoin could be an excellent alternative to the regular digitized fiat currencies in nations like Palau. According to President Suangel Whipps, the nation’s CBDC would offer a greater financial independence and inclusion.
Partnership Will Also Address Climate Change
The island nation is susceptible to the impacts of climate change, and Ripple revealed that this was one reason Palau chose the company for its CBDC program. Since Ripple’s XRP ledger utilizes green energy that is over a hundred thousand more energy-saving than Pow blockchains, it will help Palau to attain its climate alongside financial goals.
James Wallis of Ripple said that the company has a great opportunity to combine their experience, technology, and the features of Palau to make a real change in the economy and social life of its citizens. Wallis is the Vice President of Central Bank Engagements in the company.
The world is clamoring for ways to improve climate, and that includes looking for alternative energies to substitute carbon. Minting cryptocurrency and developing a CBDC consumes power excessively, and are responsible for power shortages in many countries, such as Kyrgyzstan.
Ripple is no newbie when it comes to this, as the company has been involved in a number of key initiatives to address climate change. Early this year, the company revealed its plan to become 100% energy efficient by 2030.
It started this with partnering Energy Web for its EW Zero tool. EW Zero tool is a solution that enables businesses to buy tokenized renewables to help them eliminate carbon use.
Ripple had previously led a $44M funding round for Nelnet Renewable Energy, a fintech provider that aims to focus on implementing key energy initiatives across the United States.
Ripple is still sorting its case with the SEC over XRP being unregistered security. CEO Brad Garlinghouse, said that he hopes the case would be done and dusted in 2022.