The first phase of the Palau Stablecoin Program (PSC) has been declared a success by the country’s Ministry of Finance. According to a report released on December 7, many more initiatives regarding the national digital dollar, known as PSC, have been planned with the goal of introducing it on a national scale.
The PSC project, which lasted for three months, was carried out with the participation of Ripple and utilized the XRP Ledger, a central bank digital currency (CBDC) platform. The Ministry of Finance enlisted 168 volunteers from among government employees, who were given the opportunity to spend 100 PSC at local retailers as part of the pilot program. Both the volunteers and the retailers responded positively to their experiences with PSC.
Purchasing goods was facilitated through mobile phones and QR codes or by manually entering wallet addresses. Only local retailers could exchange PSC for US dollars, the legal currency of Palau. PSC was backed by the entire sum of $20,000 held in a “US bank that is a Federal Deposit Insurance Corporation (FDIC) Level 1 insured depository.”
Among the benefits of PSC, the research noted that it would reduce fees associated with financial transactions, decrease carbon emissions from the nation’s currency, and enhance inclusivity as it does not require a bank account to use. Not all of 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.”
The report suggests that future phases of the project should focus on educational, legal, and regulatory issues. Users listed cross-border transfers and remittances as potential use cases they would like to see in the future.
Palau, with a population of around 18,000 people, began exploring digital currency in 2021. Ripple has been involved from the outset, introducing its CBDC platform in May. Binance helped Palau implement its digital identity program.
The PSC program ran from July to September.