Palau, a country located on islands in the Philippine Sea, has collaborated with Ripple to introduce a trial run of its stablecoin, pegged to the U.S. dollar and utilizing XRP technology. The limited pilot program was officially announced, with Jay Hunter Anson, a board member of Palau’s Ministry of Finance, revealing that the testing phase began roughly three weeks ago. The primary goal of this initiative is to verify the stability and efficiency of the stablecoin system’s design.
Palau and Ripple Introduce Test Pilot for U.S. Dollar-Pegged Stablecoin
Jay Hunter Anson, a board member of Palau’s Ministry of Finance, recently revealed that Palau, a nation composed of over 300 individual islands, has been collaborating with Ripple to conduct a pilot test for its U.S. dollar-pegged stablecoin on the Ripple network. The pilot program, which began in March, has been actively distributing Palau’s Stablecoin (PSC) for three weeks.
On July 13, Hunter Anson made history as the first person to use PSC, also known as the “kluk,” to buy a Micronesian breakfast from a participating vendor. He emphasized that PSC is essentially a prototype of the U.S. dollar’s digitization, developed in collaboration with Ripple and utilizing the XRPL blockchain. The success of this pilot has the potential to completely transform the payment landscape in Palau, offering a revolutionary way for its residents to conduct transactions for goods and services.
Following its initial launch, the pilot program has experienced growth, welcoming additional volunteers to test the digital currency across the three participating vendors. On July 23, Hunter Anson disclosed that a second batch of PSC had been distributed to 35 new volunteer users, further expanding the scope of the testing phase.
More on the Pilot program
On Wednesday, a press release from Ripple provided further insights into the pilot program, specifying that during its initial phase, only 200 government employees of Palau would have access to use PSC with the participating local vendors. Additionally, PSC will be created and managed through the Ripple central bank digital currency (CBDC) platform, enabling Palau’s Ministry of Finance to handle processes such as minting, distribution, redemption, and the eventual elimination of the digital token.
In addition to Ripple and Palau collaborating, the Finance Ministry of Palau will assure the reserve, ensuring that PSC can be redeemed for U.S. dollars on a one-to-one basis. The primary goal of this pilot for Palau’s government is to minimize service charges related to transaction costs, such as cash transfers and credit card payment fees, while also expanding access to financial services programs through digital channels to encompass a broader segment of its population.
Regarding this matter, President Surangel S. Whipps, Jr. of the Republic of Palau said the following:
“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.”
As the Republic of Palau and Ripple collaborate in their pilot program to test, the U.S. dollar-pegged stablecoin (PSC) it represents a significant step towards digital innovation in the nation’s financial landscape. With the support of Palau’s Finance Ministry and the involvement of government employees and local vendors, this initiative aims to revolutionize the way transactions are conducted, potentially reducing service charges and broadening access to financial services for citizens. President Surangel S. Whipps, Jr.’s commitment to this project highlights the government’s dedication to embracing digital means for fostering financial inclusivity. As the pilot progresses and gains momentum, the potential impact on Palau’s economy and the everyday lives of its people could be transformative.
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