Ripple, Palau Forge Path for Government-Backed Stablecoin

In a recent tweet, Ripple emphasized collaborating with the Republic of Palau to create a government-backed cryptocurrency. According to the update, a new phase of the initiative has begun.

Notably, Palau attempts to create a stablecoin with a 1:1 exchange rate with the US dollar. The stablecoin will also be supported by the XRP Ledger (XRPL) blockchain.

President of Palau Surangel Whipps Jr. emphasized that the country has limited economic resources to rely on.

According to him, this limitation necessitates the pursuit of diversification opportunities.

The president stated that the stablecoin project in development is one of the nation’s options for constructing a resilient economy.

Whipps said Palau’s partnership with Ripple seeks to develop a cryptocurrency to reduce payment complications 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, the Minister of Finance of Palau, Kaleb Udui Jr., expressed a similar opinion. The anticipated stablecoin, according to Udui, is a digital representation of the dollar.

The minister emphasized that individuals interested in conducting business in Palau are thrilled to receive the dollar.

However, Udui highlighted the country’s difficulties in making the dollar accessible.

Among the obstacles is the current method of transporting currency via cargo aircraft.

In addition to being inefficient in terms of cost, the minister noted that the technique entails significant logistical risks due to the absence of security services.

Udui remarked that:

“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 the country’s payment methods and legal tender would benefit the citizens because it would be readily accessible, reducing the need to visit an ATM.