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Palau will benefit from the agreement by improving its cross-border payments and digital currency technology while also reducing its carbon footprint.
The digital payment network Ripple has teamed with the Republic of Palau to assist in the development of the Pacific island nation’s own digital currency.
The initial focus of the partnership will see the development of a United States dollar-backed digital currency to help facilitate cross-border payments for the nation. The collaboration “could see the implementation of the world’s first government-backed national stablecoin in the first half of 2022,” according to Ripple’s announcement.
Ripple suggested the national digital currency may not necessarily be just another central bank digital currency (CBDC):
“Ripple would provide Palau with technical, business, design and policy support. Meanwhile, exploring a USD-backed stablecoin and associated use cases —such as a corporate registry— on the XRP Ledger could provide a viable alternative to central bank digital currencies (CBDCs) for countries like Palau.”
Palauan President Surangel Whipps Jr. said the national digital currency would “provide the citizens of Palau with greater financial access.”
As an island nation, Palau is especially vulnerable to some of the effects of climate change, and Ripple said this was one of the reasons it was chosen for the job. The firm said the XRP Ledger is “carbon-neutral and 120,000X more energy-efficient than Proof-of-Work blockchains.”
“We are excited to be working with Palau to achieve its financial and climate-related goal,” said James Wallis, vice president of central bank engagements at Ripple.
“We have a wonderful opportunity to bring together our technology and experience with the unique characteristics of Palau to make a real economic and social impact for the country.”
Ripple is no stranger to climate and environmental considerations. In February of this year, it announced its goal of becoming carbon net-zero by 2030, starting by making XRP carbon net-zero with the help of the EW Zero tool.
Energy Web’s EW Zero is an open-source system that enables enterprises to purchase tokenized renewables in order to become carbon net-neutral. Ripple also led a $44 million fundraising round for Nelnet Renewable Energy, a fintech company that helps support environmentally aware activities around the US.
Ripple has been working hard to resolve its dispute with the Securities and Exchange Commission about whether XRP tokens were issued as an unregistered securities in 2013. Brad Garlinghouse recently stated that he believes the case is doing well and that it will be completed in 2022.
The price of XRP is currently around $1.05. This is up 0.42 percent this week, but it’s still down 5.47 percent for the month.