Palau, an insular nation in the Philippines Sea, has partnered with Ripple, announcing a limited pilot for its own U.S. dollar-pegged stablecoin issued using XRP technology. According to Jay Hunter Anson, a member of the board of directors of Palau’s Ministry of Finance, the test started about three weeks ago to validate the design of the stablecoin system.
Palau and Ripple Announce Test Pilot of U.S. Dollar-Pegged Stablecoin
Palau, a country comprising more than 300 individual islands, is testing a U.S. dollar-pegged stablecoin on top of the Ripple network. Jay Hunter Anson, a member of the board of directors of Palau’s Ministry of Finance, stated that the pilot started in March and that the project has been distributing Palau’s Stablecoin (PSC) for three weeks.
Hunter Anson was the first to make a purchase using PSC, dubbed the “kluk,” purchasing a Micronesian breakfast at a collaborating vendor on July 13. He explained that PSC was “a prototype digitization of the U.S. dollar under development in partnership with Ripple using the XRPL blockchain.” If successful, this pilot could ostensibly revolutionize how inhabitants of Palau pay for goods and services.
The pilot has since expanded, adding more pilot volunteers to test the digital currency in the three enrolled vendors. On July 23, Hunter Anson announced that the second batch of PSC was distributed to 35 more volunteer users.
Pilot Definitions
In a press release on Wednesday, Ripple gave more details about this pilot program, stating that it would only allow 200 of Palau’s government employees to use PSC with the enrolled local vendors in its first phase. Also, PSC will be issued using the Ripple central bank digital currency (CBDC) platform, allowing Palau’s Ministry of Finance to mint, distribute, redeem, and destroy the digital token.
Furthermore, Palau’s Finance Ministry will guarantee the reserve to redeem PSC for U.S. dollars at a 1:1 ratio. The objective that Palau’s government seeks to reach with this pilot is to “reduce service charges for transaction costs like cash transfer, credit card payment fees” and include more of its citizens in its financial services programs through digital means.
On this, the President of the Republic of Palau, Surangel S. Whipps, Jr., stated:
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 to be innovative and nimble in releasing our stablecoin.
