Palau Finance Ministry has flagged off the second phase of its XRPL-powered central bank digital currency (CBDC) pilot program following the successful completion of Phase 1.
Palau cybersecurity advisor Jay Hunter Anson announced on the X platform (formerly Twitter) that the Palau Finance Ministry has officially launched the second phase of the Palau Stablecoin (PSC) project.
Palau Stablecoin Phase 2 Launch 🚀 pic.twitter.com/i74N698Kxp
— Jay Hunter Anson (@JHX_1138) December 17, 2023
This phase will focus on building a robust digital ecosystem, improving accessibility and user engagement, and emphasizing legal and regulatory compliance.
According to Anson, the Republic of Palau will continue its partnership with Ripple in the second phase. Consequently, the team behind PSC will leverage both Ripple’s CBDC platform and the company’s technical expertise.
Furthermore, Anson stated that the Phase 2 of the PSC pilot program will result in new collaboration on marketing and sustainable development goals.
The plan will integrate financial institutions, legal and regulatory compliance, regulatory authorities, legal frameworks, businesses, and users to achieve transaction security and transparency in line with international standards.
Furthermore, Jay Hunter Anson stated that Palau will continue to collaborate with Ripple, utilizing Ripple’s carbon-neutral CBDC platform and technology.
Notably, the phase 2 of the PSC program will focus on developing a robust digital ecosystem and bolstering user participation with an emphasis on regulatory compliance.
Ripple CBDC Advisor Reacts
Anthony Welfare, Ripple’s CBDC Strategic Advisor, has taken to the X (formerly Twitter) platform to react to the Phase 2 launch of the Palau stablecoin (PSC) pilot program.
Excellent to see Phase 2 of the Palau #stablecoin project being officially launched 👍
The PSC is a Digital Currency backed 1:1 with the $USD held in an FDIC insured commercial bank.
— Antony Welfare (@AntonyWelfare) December 15, 2023
Welfare confirmed that the Phase 2 of the PSC pilot program has been launched and also highlighted the benefits of blockchain-based digital currency, including low transaction fees and mitigating the carbon footprints associated with money flow.
The Ripple CBDC advisor also identified some challenges, including moving fiats around the 340 islands in Palau. Additionally, he mentioned that mobile data is expensive in the country.
Welfare noted that Palau residents can make offline payments during power outages with a blockchain-based digital currency like PSC.
For context, PSC is a dollar-pegged digital currency backed 1:1 with the USD. The USDs backing PSC are held in an FDIC-insured commercial bank. It bears mentioning that PSC is issued on the XRP Ledger (XRPL).
PSC Phase 1
The development comes days after Palau’s Ministry of Finance declared the first phase of the PSC program a success. Phase 1, which lasted for three months, saw the Ministry of Finance recruit 168 volunteers from government employees.
The selected volunteers were given 100 PSCs each to spend at participating local retailers. Participants made payments using their mobile phones to scan a QR code.
Interestingly, the participating retailers and volunteers gave positive feedback regarding their experience with the digital currency.