The first phase of the Palau Stablecoin Program (PSC) has been declared a success by the country's Ministry of Finance. According to a report, further work is planned on the national stablecoin pegged to the US dollar with the aim of introducing the PSC on a national scale. released on December 7th.
The three-month PSC project was carried out with the participation of Ripple and used the XRP Ledger CBDC platform. The Ministry of Finance recruited 168 volunteers from among government employees, who were able to spend 100 PSC at participating local retailers. Both volunteers and retailers responded positively to their experience with the PSC.
Purchases were made using a phone and a QR code or by manually entering a wallet address. Only retailers were able to redeem the PSC for US dollars, which is the legal currency of Palau. The PSC was fully guaranteed for $20,000 at “a Federal Deposit Insurance Corporation (FDIC) Tier 1 U.S. bank.”
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Among the benefits of the PSC, the study noted that it will reduce fees associated with financial transactions, reduce the carbon footprint of the country's money and increase inclusion, since a bank account is not needed to use the PSC. Not all islands in the country have banks. The report said:
“The Republic of Palau continues to demonstrate its commitment to digital innovation and financial modernization with its Stablecoin program.”
Ministry of Finance Republic of Palau Stablecoin Program: Phase 1 Report dated December 7, 2023, prepared by the Ministry of Finance and @Vibe Inc.
This report provides an analysis and conclusions of the Palau #stablecoins (PSC) Phase 1 Pilot Project, a pioneering effort in… pic.twitter.com/SLtjYqfbI3
-Jay Hunter Anson (@JHX_1138) December 7, 2023
Future phases of the project should emphasize education and legal and regulatory issues, according to the report. Users listed peer-to-peer transfers and remittances as future use cases they would like to see.
Palau, which has a population of around 18,000, began exploring digital currency in 2021. Ripple was involved from the beginning. Ripple introduced its CBDC platform in May. Binance helped Palau implement a digital ID program.
The PSC program began in July and ran through September.
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