In the Western Pacific, an island group is betting on Ripple technology to digitize its money system. Using an XRP ledger, Palau is building its own stablecoin.

The Republic of Palau and Ripple have launched a stablecoin pilot project. The company behind the XRP coin explains this in a press release. According to the statement, the collaboration has existed since 2021 and serves to explore potential use cases, including, for example, the launch of a US dollar-backed Palau Stablecoin (PSC).

The Republic of Palau is partnering with Ripple to pilot a USD-backed stablecoin on the #XRPLedger.

Learn about the benefits for citizens and merchants and how the Ripple #CBDC Platform will be leveraged in this next phase of the Palau #stablecoin pilot.https://t.co/JRuBNn2UBy
— Ripple (@Ripple) July 27, 2023

Ripple is rolling out the pilot program in phases. 200 Palau government employees and local merchants are part of the first phase, Ripple itself said. For this, the archipelago in the Western Pacific uses Ripple’s CBDC platform, an end-to-end solution for central banks to issue their own digital coin. 1:1 reserves in USDC and USDT serve as collateral for the PSC stablecoin. Paulau’s Ministry of Finance is responsible for overseeing the system, it adds.

"By digitizing our currency, we hope to improve our economy, government processes and financial transactions and in this way make our citizens more innovative," said the president of Palau.

The archipelago is not the first country to rely on Ripple’s technology to digitize its currency system. Montenegro is also looking to improve its financial system with its own stablecoin. Apart from the stablecoin initiative, Ripple also scored a major success this month in its lawsuit against the U.S. securities regulator SEC.