Palau has taken a major step towards becoming a global leader in blockchain-based digital currency. The country’s Ministry of Finance has announced the commencement of operations with the second phase of the Palau Stablecoin (PSC) Program, executing this initiative in collaboration with Ripple’s CBDC platform.
Yesterday the Republic of Palau Ministry of Finance officially launched Phase 2 of the Palau #Stablecoin (PSC) program, based on a 1:1 tokenized U.S. Dollar.
The Republic of Palau Ministry of #Finance seeks to expand accessibility and user participation, reaching a wider… pic.twitter.com/FUt7mM8CLr
— Jay Hunter Anson (@JHX_1138) December 15, 2023
The PSC Program will aim to create and distribute a digital currency pegged on the U.S. dollar. The program will offer cross-border payment and remittance solutions on blockchain. XRP Ledger (XRPL), Ripple’s CBDC platform, will provide the PSC team to issue and manage digital currency over a secure yet scalable network.
PSC stands for Palau Stablecoin, a central bank digital currency always backed by one U.S. dollar. FDIC-insured commercial banks host the PSC, ensuring stability through highly liquid reserves held by the central bank. The government of Palau issues the PSC on the XRPL, a very cheap and efficient distributed ledger technology.
The PSC applies to various things, including online shopping and peer-to-peer transfers, mobile credit top-ups, and donations, among other possibilities. ExchangingIt’s the PSC at participating retailers or vendors for other currencies, goods, and services is possible.
The PSC Program is conducting two consecutive waves or phases: it announced Phase 1 on December 7, and Phase 2 commenced on December 17, 2023. In Phase 1, 168 government employees-volunteers received 100 PCVs as a token to spend for the participating local retail shops under the program. Phase 2 will establish new collaborations for marketing and sustainable development goals.
Palau’s CBDC Forges Partnership with Ripple
Palau decided to work with Ripple based on the company’s global experience and competence in developing CBDCs. Ripple has partnered with central banks and regulators worldwide to research blockchain-based digital currencies for enhancing financial inclusions, efficiency, transparency, and security.
Ripple also provides technical support and guidance to the PSC team, enabling them to use its CBDC Platform effectively and securely. Ripple’s CBDC Strategic Advisor, Anthony Welfare, commented on X (formerly known as Twitter) going live with Phase 2.
Excellent to see Phase 2 of the Palau #stablecoin project being officially launched 👍
The PSC is a Digital Currency backed 1:1 with the $USD held in an FDIC insured commercial bank.
— Antony Welfare (@AntonyWelfare) December 15, 2023
Furthermore, Several benefits underscore the welfare impact of blockchain-based digital currency. These advantages over standard fiat and cryptocurrencies include lower transaction costs and faster settlement times. Additionally, they encompass reduced environmental footprint, better privacy considerations, and more.
Welfare also noted some of Palau’s challenges in implementing its CBDC program. He said that given logistics, moving traditional currencies across the 340 islands in Palau can be a complex affair. He also indicated that Palau has high mobile data costs because the region has limited coverage.
However, Offline transactions with blockchain-based digital currency such as PSC could address such challenges, according to Welfare. He went on to explain how the residents of Palau conduct their transactions. Even during power outages, they use QR codes or NFC devices.
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