A little-known island country located in the western Pacific with a population of roughly 18,000, hopes to be the world’s first country to launch an official stablecoin.
Ironically, the Republic of Palau is unlikely to have cutting-edge technology to meet such a far-fetched goal.
Plans to succeed under partnership
The official US government website shows the relationship between these two countries, revealing Palau’s backup that may help her take on the bold mission.
According to the website, In 2010, the two nations signed the Compact Review Agreement under which, “The Compact Review has identified U.S.-Palauan cooperative efforts to promote trade and investment in Palau, which will complement current initiatives to expand and develop a healthy economic partnership.”
A US-based cryptocurrency firm, Ripple announced plans to work with Palau. “We’re excited to announce a new partnership with the Republic of Palau to explore the country’s first national digital currency and its use cases with the XRP Ledger (XRPL).”
The president of the Republic of Palau said his government was delighted and that 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.”
Ripple to help Palau achieve its financial and climate-related goals
Tiny Palau has huge climate-related goals and is set to partner with the US “on the next Our Ocean Conference, planned for early 2022 in Koror, Palau.”
And that is the reason why Palau chose Ripple. The firm claims to have “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.”
The VP of Central Bank Engagements at Ripple, James Wallis added “We are excited to be working with Palau to achieve its financial and climate-related goals.”
Stablecoins better than other cryptos
Stablecoins are much preferred to other digital currencies such as bitcoin, and ethereum because their value is pegged to a financial asset, usually the US dollar.
Palau uses the US dollar as its official currency. It’s stablecoin may be pegged on the USD as well.
Although the idea might excite most citizens of Palau, success isn’t guaranteed.
Speaking to Al Jazeera, Ross Buckley, an expert in FinTech and digital currencies at the University of New South Wales in Sydney, Australia says “countries such as China, the UK, and Canada had yet to launch official digital currencies despite years of research and planning.”
