Ripple and the Republic of Palau partner to explore a digital currency using the XRP Ledger

According to Ripple, the Pacific island nation of Palau has partnered with them on a U.S. dollar-backed digital currency for the country, the world’s first government-based national stablecoin, using the XRP Ledger.

Palau partners Ripple on national stablecoin using XRP Ledger

Despite the problems, Ripple has not given up on its mission to become a significant player in the global payments industry, and even though things are not going so well with the United States, one country is looking at the company as the best option to develop a domestic currency based precisely on U.S. dollars: Palau.

“Palau chose Ripple because of its extensive experience in blockchain and building global payment systems, and the XRP Ledger because it’s carbon-neutral and 120,000x more energy-efficient than proof-of-work blockchains,” said Ripple in its announcement.

Palau chose the XRP Ledger to create digital dollars to circulate internally in the country. The idea is to design a USD-backed stablecoin around which could be developed other services like corporate registries.

“As part of our commitment to lead in financial innovation and technologies, we are delighted to partner with Ripple,” said Surangel S. Whipps Jr., president of Palau. “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.”

Palau, a group of over 300 islands in the Micronesia region of the western Pacific Ocean, is renowned for its beautiful island scenery. The country has a population of 22,000 and a GDP of US$268 million, according to World Bank data. They don’t have a fiat currency of their own. Like El Salvador, citizens use the U.S. dollar as legal tender. However, the small island in Oceania does not want to adopt XRP or any cryptocurrency as legal tender but hopes to issue a government-managed digital version of the U.S. dollar.

A U.S. dollar-backed stablecoin and related use cases — such as a corporate registry — on the XRP Ledger could be an alternative to central bank digital currencies (CBDCs), Ripple said. Palau’s initiative looks more like the issuance of a stablecoin than a CBDC. And this makes a lot of sense because Palau has no Central Bank.

The news does not seem to have much effect on the price of XRP. After the strong rally in July 2021, XRP corrected nearly 34% within three weeks, falling from the $1.4 mark to as low as $0.86. Since then, it has been trading sideways, unable to definitively break the $1.2 resistance nor the support in the $1 area.

ripple-and-the-republic-of-palau-partner-to-explore-a-digital-currency-using-the-xrp-ledger

XRP/USD 4-hour chart | Source: TradingView

On November 23, XRP recorded a 2.97% increase from $1.03 to $1.06. However, the current price of $1,043 represents a drop of nearly 2%, again showing the token’s lack of trend.

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