Recently, FinTech firm Ripple talked about its newly formed partnership with a small Western Pacific nation.

In a blog posted published on Tuesday (November 23), Ripple announced “a new partnership with the Republic of Palau to explore the country’s first national digital currency and its use cases with the XRP Ledger (XRPL).”

Here is some information abut Palau from Wikipedia:

Palau is an island country in the western Pacific. The nation has approximately 340 islands… It has a total area of 466 square kilometers (180 square miles)… The country uses the United States dollar as its currency.

The XRP Ledger was created in 2012 by David Schwartz, Jed McCaleb, and Arthur Britto, and XRP is the native currency of the XRP Ledger.

Ripple says that this new partnership will “initially focus on developing strategies for cross-border payments and a USD-backed digital currency for Palau.” This could mean “the implementation of the world’s first government-backed national stablecoin in the first half of 2022 for which Ripple would provide Palau with technical, business, design and policy support.”

Ripple believes that “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.”

Palau President Surangel Whipps Jr. had this to say:

As part of our commitment to lead in financial innovation and technologies, we are delighted to partner with Ripple. The first phase of the partnership will focus on a cross-border payments strategy and exploring options to create a national digital currency, providing the citizens of Palau with greater financial access.

The most interesting part of this announcement was the following paragraph:

Palau chose Ripple because of its extensive experience in blockchain and building global payment systems, and the XRP Ledger because it’s carbon-neutral and 120,000x more energy-efficient than proof-of-work blockchains. What’s more, the XRPL provides significant benefits such as scalability, speed and low cost.

James Wallis, VP of Central Bank Engagements at Ripple, stated:

We are excited to be working with Palau to achieve its financial and climate-related goals. 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.

In a blog post published on March 3, Ripple said that more than 80% of the world’s central banks are “actively exploring some form of sovereign-backed cryptocurrency”, and that eventually there would be a wide range of central bank digitial currencies (CBDCs).

Ripple went on to say that existing public blockchains cannot meed the needs of CBDCs since “a Central Bank requires more transaction privacy and control over its currency than a public ledger can offer,” which means that it is “most likely opt to create a CBDC on a private ledger that can also operate at the required scale.”

Also, it mentioned that that interoperability is crucial:

Additionally, interoperability – the ability for a private ledger to connect with today’s existing global financial infrastructure, as well as other CBDCs and other digital currencies– will be critical. In fact, in its 2021/22 innovation program, the Bank for International Settlements identified interoperability for cross-border payments as a major priority for CBDCs.

Ripple’s proposed solution to this problem is the CBDC Private Ledger, which uses the same distributed ledger technology as the XRP Ledger, which means that it is “built for payments” and “designed for issuing currencies”; XRP could then serve as “a neutral bridge asset for frictionless value movement between CBDCs and other currencies.”

According to Ripple, transactions on the CBDC Private Ledger will be low-cost, reliable, and fast; initially, it will handle tens of thousands of transactions per second (TPS) ” with the potential to scale to hundreds of thousands TPSs over time.”

Ripple is “currently engaged with Central Banks around the world to better understand their goals and assess how the CBDC Private Ledger can help achieve them. “

XRPL co-creator and Ripple CTO David Schwartz says:

The XRPL has been running smoothly for 8+ years w/ billions of $ at stake. The CBDC Private Ledger ensures transaction privacy and security controls combined w/ the reliability and payments proficiency of the XRPL – the best of both worlds.

Monica Long, General Manager of RippleX, “Ripple’s initiative to create an open developer platform for money”, says:

Tokenization has always been a key feature of the XRPL with over 5400+ issued tokens since inception. CBDCs will live on new private ledgers that run parallel to XRPL, using XRP as a bridge to interoperate w/ other currencies. No more walled gardens!

Matt Hamilton, Director of Developer Relations at RippleX, has clarified a couple of things for members of the XRP community:

  • The public ledger is built for payments. And it was built nearly a decade ago, long before banks knew how they would use blockchains. This gives the best of both worlds, a ‘private’ blockchain for intra-bank, but linked to a public one for inter-bank.
  • Every single custodial exchange (Bitstamp, Binance, Kraken, Gemini, Coinbase, etc) is a ‘private ledger’. Just run on closed-source software. This is the same, but open source, and decentralised (within that entity).


The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.

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Featured Image by “qimono” via Pixabay