The South Asian kingdom is launching a pilot program to test a digital currency in partnership with Ripple.
Bhutan, a Buddhist kingdom on the eastern edge of the Himalayas, is testing a central bank digital currency (CBDC) based on Blockchain with the help of the company Ripple Labs.
The cryptocurrency company has partnered with the South Asian country’s central bank, according to a press release. According to the information, the Bhutan’s Royal Monetary Authority (RMA) to Leverage Private Ledger Technology from Ripple to run pilot tests of a CBDC.
Although the statement did not provide further details on the start and development dates of the pilot, they stressed that it will be built on the country’s current payment infrastructure and will be carried out in several phases.
Bhutan to launch a digital currency
As such, the test will include the issuance of a digital version of the ngultrum, the national currency of Bhutan, for use in retail, cross-border and wholesale payments. The move is part of an effort by the RMA to improve cross-border payments, expand financial inclusion among its residents, and “extend your commitment to sustainability“, he pointed Ripple Labs in the statement.
Bhutan’s stated goal is for its population to reach 85% financial inclusion by 2023. A report from RMA published in December of last year it placed a measure of Bhutan’s financial inclusion at 67.6% in 2019. The country’s monetary authority also indicated that its goal is “develop a secure and robust payment system”To consolidate it as a leader in financial innovation.
“Our collaboration with Ripple is a testament to the potential of CBDCs to provide an alternative and sustainable digital payment instrument in Bhutan.“Yangchen Tshogyel, deputy governor of the Royal Monetary Authority of Bhutan, said in the statement.
Ripple’s innovative technology will allow for CBDC experimentation with our existing payments infrastructure, while ensuring efficient and cost-effective cross-border transfers.
According to the information, the central bank of Bhutan had already launched in 2019 the Global Interchange for Financial Transactions (GIFT), a system that enables the electronic transfer of high-value and massive payments. In addition, it claims to be the only country in the world with negative carbon emissions.
Ripple gets a partner to test CBDC
In addition to claiming to share the same commitment as Bhutan to sustainability, Ripple It indicated that its network will help the country’s central bank develop a successful payment solution that is tailored to its needs and requirements.
The private ledger of Ripple, which is based on the XRP Ledger Open source, it claims to be 120,000 times more efficient than standard proof-of-work blockchains. This characteristic makes it desirable for a carbon neutral approach, according to the release. Its technology also seeks to provide central banks with “flexibility” and “control”Without sacrificing financial stability and monetary policy objectives.
“Beyond privacy, the CBDC solution is also custom designed to handle payments in the transaction volume required by a successful retail CBDC.”Ripple said in the statement. “This provides central banks like the RMA with the security, control and flexibility they need to implement a CBDC without compromising financial stability or monetary policy objectives. “
The announcement comes more than six months after Ripple announced for the first time that it would be testing a private version of its network designed to provide central banks with a solution for issuing CBDCs. Bhutan is one of the first countries to make use of this service.
Although the company has already made progress in the cross-border payments sector with several banks. This year, SBI Ripple Asia, a joint venture between SBI Holdings and Ripple, introduced Cambodia’s first international remittance service using Blockchain.
Sources: Ripple, CoinDesk, file
Version by Hannah Estefanía Pérez / DailyBitcoin
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