Ripple, a US-based cryptocurrency and payments company, shakes hands with the Royal Monetary Authority of Bhutan (RMA) to test Ripple’s Central Bank Digital Currency (CBDC) and ensure the central currency’s sustainable management Ngultrum.
With a population of 800,000 and a GDP of $2.5B last year (2020), Bhutan’s citizens are happy with the country’s economy. That is why Bhutan planned to seek alternatives to centralise its finance further.
The Royal Monetary Authority of Bhutan (RMA) has proven itself a leader in payments and financial innovation. As a result, improving the country’s banking services at will.
Ripple’s CBDC Solution is carbon-neutral, which aligns with the feasibility goals of the central bank. And if we define Ripple’s CBDC Solution, then the CDBC Private Ledger is based on the same blockchain technology that provides the XRP Ledger (XRPL). Its pilot comes as central banks around the world increasingly explore and develop CBDCs.
Apart from ensuring privacy, Ripple’s solution is further custom-designed to handle high volume payments and transactions.
However, Ripple is still facing heavy lawsuits in the US. Over unregistered securities, offering worth over the US $1 billion. Still, the San Francisco based company will integrate its distributed ledger technology into Bhutan’s existing payment system.
This will provide the central banks with a secure, flexible and controlled solution for managing and issuing digital currencies worldwide.
XRP’s Ledger is found to be more effective than Bitcoin and the current version of Etherium. Also, XRP Ledger is 120,000 times more energy-efficient than proof-of-work blockchains.
This was the key consideration for Bhutan, as sustainability is high on its priority. However, despite the positive news for Ripple company, XRP still slips down 6% after announcing the news.
Ripple’s firm foothold in Asia
The news boosts Ripple, which already has a very firm grip on the biggest continent. Because of its partnership with japan’s financial giant SBI. And now the Central banks all across Asia are also scrambling to get a piece of CBDC projects.
Ripple further stated that its CBDC solution leverages a private version of the public and open-source XRP ledger. This will ensure that central banks have greater control over the issuance, privacy and management of course validation than they would ever get using public blockchain networks. And the mission by 2023 is to increase the country’s financial inclusion rate upto 80-85% courtesy digital payments system.
It will surely give an edge to Bhutan’s Finance system in the years to come.