Palau partners with Ripple on climate-friendly national digital currency

The partnership will help Palau be climate-friendly while enhancing its cross-border payments and digital currency technologies.

Ripple, the digital payment network, has partnered with the Republic of Palau to help the Pacific island nation develop its own digital currency.

The initial focus of the partnership will see the development of a United States dollar-backed digital currency to help facilitate cross-border payments for the nation. The collaboration “could see the implementation of the world’s first government-backed national stablecoin in the first half of 2022,” according to Ripple’s announcement.

Ripple suggested the national digital currency may not necessarily be just another central bank digital currency (CBDC):

“Ripple would provide Palau with technical, business, design and policy support. Meanwhile, exploring a USD-backed stablecoin and associated use cases —such as a corporate registry— on the XRP Ledger could provide a viable alternative to central bank digital currencies (CBDCs) for countries like Palau.”

Palauan President Surangel Whipps Jr. said the national digital currency would “provide the citizens of Palau with greater financial access.”

As an island nation, Palau is especially vulnerable to some of the effects of climate change, and Ripple said this was one of the reasons it was chosen for the job. The firm said the XRP Ledger is “carbon-neutral and 120,000X more energy-efficient than Proof-of-Work blockchains.”

“We are excited to be working with Palau to achieve its financial and climate-related goal,” said James Wallis, vice president of central bank engagements at Ripple.

“We have a wonderful opportunity to bring together our technology and experience with the unique characteristics of Palau to make a real economic and social impact for the country.”

Ripple is no stranger to climate and environmental considerations. In February of this year, it announced its goal of becoming carbon net-zero by 2030, starting by making XRP carbon net-zero with the help of the EW Zero tool.

EW Zero is an open-source solution from Energy Web that allows businesses to purchase tokenized renewables to help them become carbon net-neutral. Ripple also led a $44-million funding round for fintech provider Nelnet Renewable Energy to help fund environmentally conscious initiatives across the United States.

Related: Bank of Russia plans to take fees for CBDC transactions: Report

Ripple has been busy putting to bed its case with the U.S. Securities and Exchange Commission over whether XRP tokens were issued an unregistered security in 2013. Brad Garlinghouse recently said that he believes the case has made good progress and will be over in 2022.

XRP is currently trading at about $1.05. That is up 0.42% this week but is down 5.47% through November.