Palau has collaborated with the digital payment network, Ripple as it seeks to develop its digital currency. While the primary aim of this collaboration is to develop a USD-backed digital currency to enhance its cross-border payments for the Pacific island nation, there may be more to the partnership than meets the eye.
Palau Not Necessarily Developing CBDCs
As Ripple suggests in its official announcement, the partnership is likely going to lead us to see the world’s first government-backed national stablecoin by the first half of 2022. By all ramifications, this implies that the upcoming national digital currency might not exactly be just another Central Bank-issued Digital Currency (CBDC).
The announcement also mentions how Ripple intends to offer technical, design, policy, and business support to Palau. Meanwhile, the partners are also considering the idea of a USD-backed stablecoin and associated use cases on the XRP Ledger. If successful, this could be a viable alternative to CBDCs for a country like Palau.
Ripple Chosen For The Job Due To Climate Reasons
One of the reasons Ripple became chosen for this partnership was because of the vulnerability of Palau to the effects of climate change, especially seeing as it is an island nation. According to the firm, the XRP Ledger is actually carbon-neutral and 120,000X more energy-efficient than Proof-of-Work blockchains.
Speaking about the partnership, VP of Central Bank Engagements at Ripple, James Wallis expressed his excitement working with Palau as they look to achieve its financial and climate-oriented goal.
Furthermore, he said the partnership presents a great opportunity to integrate Ripple’s technology and experience with the characteristics that are peculiar to Palau to make a real economic impact on the country.
This is not the first time Ripple is showing considerations for climate and environment though. In February 2021, the firm announced that by 2030, it hopes to become carbon net-zero, beginning its ambitions by making XRP carbon net-zero using the EW Zero tool. Not only that but Nelnet Renewable Energy’s $44 million funding round was also led by Ripple to help fund environmentally-focused initiatives across the USA.
Meanwhile, other firms and protocols are also looking to address climatic effects and environmental changes that result from digital assets/currency activities.
As reported by TheCoinrise in early October, MakerDAO is planning to ensure that all of its collateral is made up of assets that are environment friendly.