The first phase of the Palau Stablecoin (PSC) Program has been declared a success by the country’s Ministry of Finance. More work on the United States dollar-pegged national stablecoin is planned, with the goal of introducing the PSC on a national scale, according to a report released on Dec. 7.
The three-month PSC project was carried out with the participation of Ripple and used the XRP Ledger central bank digital currency (CBDC) platform. The Finance Ministry recruited 168 volunteers from among government employees, who were able to spend 100 PSC at participating local retailers. Both the volunteers and retailers responded positively to their experience using the PSC.
Purchases were made using a phone and a QR code or by manually inputting a wallet address. Only the retailers were able to redeem the PSC for U.S. dollars, which is Palau’s legal currency. The PSC was fully collateralized by $20,000 in “a Tier 1 Federal Deposit Insurance Corporation (FDIC) United States 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 no bank account is needed to use the PSC. Not all the country’s islands have banks. The report stated:
“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
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Author: Derek Andersen
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