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The Republic of Palau has collaborated with Ripple Labs to mint its inaugural stablecoin, the XRP Ledger (XRPL) based Palau Stablecoin (PSC). The island state doesn't have a central bank and the US dollar is the country's main medium of exchange. The Ministry aims to reduce payment costs within the Palau and enhance access to financial services, particularly for underserved communities and socio-economic groups, using digital solutions. https://twitter.com/JHX_1138/status/1683445766952562689

The Ministry of Finance of Palau launched the second phase of its U.S. dollar-pegged Palau Stablecoin (PSC) pilot. The first phase ran from end-June to end-September 2023. The second phase will prioritize the development of a digital ecosystem and increased user engagement, and integration of financial institutions, legal and regulatory compliance, regulatory bodies, legal frameworks, businesses, and users for transaction security and transparency that adheres to international standards. Palau will leverage Ripple's CBDC Platform and technical expertise. https://twitter.com/JHX_1138/status/1735660342389227656

Ripple has provided more details on the U.S. dollar-backed Palau Stablecoin (PSC) proof-of-concept (PoC). Each PSC will be valued at one U.S. dollar guaranteed by a 1:1 reserve in fiat currency and issued on Ripple's XRP Ledger (XRPL). Palau's Ministry of Finance (MOF) will supervise the system and trigger the issuance and redemption of stablecoin units, while always guaranteeing the 1:1 reserve. The PoC will roll out in phases, with the first three-month phase involving about 200 government employees and local merchants. If the first phase is successful,  additional phases will roll out later in the year (2023). https://www.palaugov.pw/wp-content/uploads/PALAU-STABLECOIN-FAQs-2.17.23.pdf

The Republic of Palau Ministry of Finance (MOF) published the results of its Palau Stablecoin (PSC) proof-of-concept (POC) in which 168 government employee volunteers and three selected retailers tested the platform from June 30 to September 30, 2023. Ripple provided the underlying technology. After being paid in PSCs, retailers were then free to request a redemption of the PSC received for Fiat USD from the MOF custody funds. Both volunteers and retailers responded positively to the value proposition brought by the PSC as a digital payment system. If future phases are approved by the government, they will focus on building a robust ecosystem that integrates financial institutions, regulatory bodies, legal frameworks, businesses and users into the network.

President Surangel Whipps Jr. reportedly confirmed that the Republic of Palau continues to work with Ripple on the creation of a government-issued US dollar-backed stablecoin (the US dollar is Palau's national currency). Last year Ripple announced a partnership with Palau to explore a national digital currency and its use cases based on XRP Ledger, initially focusing on cross-border payments.

The Republic of Palau has partnered with Ripple to develop a U.S. dollar-backed digital currency for the country using the XRP Ledger. If launched, it could be the world's first government-based national stablecoin (GovCoin). (The Pacific island nation has no central bank and uses the U.S. dollar as its official currency, so a central bank digital currency (CBDC) is out of the question.) The IMF hasn't opined on this yet, but it was only a month ago that it completed its 2021 Article IV mission and no mention was made of any such development.

Ripple will reportedly participate in the Hong Kong Monetary Authority's (HKMA's) digital Hong Kong dollar (e-HKD) central bank digital currency (CBDC) pilot program by showcasing a real estate asset tokenization solution. Ripple will partner with Taiwan's Fubon Bank and others to demonstrate equity release with tokenized assets using a retail version of the e-HKD CBDC. The pilot project will run on the new Ripple CBDC Platform, that uses a new private ledger with XRP Ledger technology and enhanced functionality, including offline transactions and non-smartphone use. It's the same platform that may be piloted in Bhutan, Montenegro and Palau.

The IMF published an overview of the development of digital money and payment systems in twelve Pacific island countries (PICs), assessing potential benefits and risks, with a focus on how they can harness digital technology to enhance financial inclusion and payment efficiency while minimizing risks. The paper also examines the prerequisites for successfully adopting various forms of digital money and proposes a strategic framework for policy decisions (see Figure 10). It advocates a gradual, well-informed approach, tailored to PICs' unique monetary and financial circumstances, including the presence of national currencies and the maturity of payment systems. Moreover, the paper suggests that a regional approach could help address capacity and scalability challenges in introducing new digital money forms and payment methods in PICs.