The project aims to develop a cross-border payment system and a U.S. dollar-pegged digital currency for the country

A San Francisco-based provider of blockchain solutions for cross-border payments enterprises Ripple has partnered up with Palau to create a sovereign virtual currency strategy. The firm shared a tweet of a blog post confirming the news earlier today. Palau will soon have a virtual currency if the project is a success. It will most likely be the first government-backed stable coin.

Initial plans to deploy the digital currency in the first half of 2022

Palau is going to leverage Ripple’s technical and business knowledge in its plans. It intends to launch the national stable currency before July next year. They are also looking at the feasibility of a USD-backed stabilize coin and potential uses on the XRP ledger.

“We are proud to partner with Ripple as part of our commitment in financial innovation and technology leadership,” Palau President Surangel. S. Whipps Jr. stated. “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.”

Ripple believes that the ledger could be used as an alternative to central bank-backed digital currencies. This is similar to the UK’s research. Palau is one country that does not have its own currency and relies on the US dollar. However, it is not planning to adopt Ripple’s native token, XRP, or any other cryptocurrency coin as legal tender.

Using the carbon-neutral approach

Palau is an archipelago that contains more than 500 island. It is well-known for its stunning island scenery and raises serious concerns about digital assets such as Bitcoin’s impact on the environment. Ripple clarified that its XRP ledger is not only scalable and fast but also environmental-friendly. Ripple stated that the ledger is faster than blockchains using the Proof of Work method.

“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.” Ripple noted in a release.

James Wallis,

Ripple, spoke highly about the chance to work with Palau in the project.

” We are thrilled to work with Palau in achieving its climate and financial goals. “We have a fantastic opportunity to combine our technology and experience, with Palau’s unique characteristics, to make a real economic impact for the country,” Wallis who is the VP Central Bank Engagements at the FinTech company noted.

Palau joins the growing list of countries that are pursuing blockchain technology, even though the Micronesia island is taking a unique approach.

The partnership with Ripple is at a time when Ripple is facing legal problems with the US Securities and Exchange Commission. Due to legal problems, Ripple lost its partnership with MoneyGram and peer-to-peer payment firm MoneyGram. Yesterday, Ripple boss Brad Garlinghouse said in a CNBC interview that the case was moving along well and that it would likely be resolved by next year.