Palau reveals that it seeks to launch its dollar-backed stablecoin with Ripple to boost the economy and improve financial inclusion.
In a recent tweet, Ripple spotlighted its endeavor with the Republic of Palau concerning establishing a government-backed cryptocurrency. According to the update, the initiative has entered a new phase.
Notably, Palau seeks to establish a stablecoin to exchange in a one-to-one ratio with the US dollar. Additionally, the stablecoin will be powered by the XRP Ledger (XRPL) blockchain.
The Republic of Palau is partnering with Ripple to pilot a USD-backed Stablecoin on the #XRPLedger.
— Ripple (@Ripple) August 19, 2023
The tweet included a clip where the government of Palau elaborated on its aim for establishing a stablecoin in Palau’s economy.
Palau Government Remarks
Surangel Whipps Jr., President of Palau, highlighted that the country has limited resources to rely on for economic prosperity. According to him, this limitation prompted the need to seek ways for diversification.
The president expressed that the stablecoin project in the pipeline represents one of its options for building a resilient economy. Whipps mentioned that Palau’s collaboration with Ripple aims to build a cryptocurrency to ease the payment hassle in the country.
In his words:
“We have people that live on remote islands. They keep their money under their pillows. What we want to be able to do with a stablecoin is allow those people to keep that money in a safe and secure place, easy for them to transfer.”
Also, Palau Minister of Finance, Kaleb Udui Jr., echoed a similar sentiment. Udui noted that the anticipated stablecoin is a digital representation of the dollar.
The minister highlighted that people interested in doing business in Palau are delighted to receive the dollar. However, Udui stressed the country’s challenges in making the dollar available.
The challenges include the current method of shipping cash via cargo aircraft. The minister noted that aside from being cost-inefficient, the method bears far logistic risks given the absence of security services.
“If you want physical currency, you need to go to the bank and buy it from them; this is a cash economy. We use it for most of our transactions. Palau does not have a central bank. So the government issuing a stablecoin is tantamount to being a central bank digital coin.”
The finance minister concluded that having a stablecoin as one of its payment methods and legal tender will benefit the citizens as it will be easily accessible, cutting the stress of going to the ATM.